Commodities
Gold treads water amid Fed uncertainty, copper extends rebound
Gold prices moved little on Wednesday as markets hunkered down ahead of an upcoming Federal Reserve meeting, while copper prices extended a rebound from six-month lows.
The yellow metal saw some support this week as weak U.S. economic data pulled down the dollar and spurred some bets that the Fed will lack the headroom to keep raising interest rates.
But this support was limited as the dollar recovered amid uncertainty over the Fed’s next move. While some facets of the U.S. economy appeared to be cooling, inflation and the labor market were still running hot, putting more pressure on the central bank to tighten policy.
Even if the Fed pauses its current rate hike cycle, it is expected to keep interest rates higher for longer – a scenario that bodes poorly for non-yielding assets such as gold.
Fed Fund futures prices show that markets are pricing in a nearly 82% chance the Fed will hold rates steady next week.
Spot gold was flat at $1,963.51 an ounce, while gold futures fell 0.1% to $1,979.65 an ounce by 20:03 ET (00:03 GMT). Both instruments moved little in the prior session, after recovering from more than two-month lows hit last month.
The yellow metal has seen limited safe haven demand over the past month, even as a string of weak data releases battered appetite for risk-driven assets. But a U.S. and European recession this year may eventually spruce up gold demand.
Economic indicators from other major economies are on tap this week, starting with first quarter GDP data from Australia and Japan. Chinese trade and inflation data is also due this week.
Other precious metals rose slightly on Wednesday. Platinum futures rose 0.3%, extending a recovery from near two-month lows, while silver futures rose 0.1%.
Among industrial metals, copper prices continued to push higher after reaching an apparent bottom of six-month lows in May. The red metal was also encouraged by some positive economic data from China.
Copper futures rose 0.2% to $3.7757 a pound, after adding more than 1% in the prior session.
Focus is now squarely on Chinese trade data due later in the day, for more cues on commodity demand in the world’s largest copper importer. Chinese commodity imports had slumped in April as a post-COVID economic recovery ran out of steam, which in turn fueled doubts over strong commodity demand this year.
Investing.com — Goldman Sachs has delayed its gold price target of $3,000 per ounce, pushing the forecast to mid-2026 instead of the previous expectation for December 2025.
The revision comes as Goldman’s economists now foresee fewer Federal Reserve rate cuts in 2025, with a smaller anticipated reduction of 75 basis points, compared to the 100 basis points expected previously.
The change is expected to slow the pace of ETF gold buying, leading to a delayed rise in gold prices.
In a research note on Monday, Goldman Sachs stated, “We now forecast that gold will rise about 14% to $3,000/toz by 2026Q2 (vs. Dec25 previously) and now expect it to reach $2,910/toz by end-2025.”
While central bank demand for gold remains a key driver of the bullish forecast, contributing a projected 12% increase by 2026Q2, weaker-than-expected ETF flows following the resolution of the U.S. elections have dampened price expectations, according to the investment bank.
Speculative demand, which surged ahead of the U.S. election, has since moderated, keeping prices range-bound.
Goldman Sachs maintains that structural factors, particularly “structurally higher central bank demand,” will provide support for gold prices, even as ETF demand grows at a slower pace.
Central bank purchases, particularly following the freeze of Russian assets, have surged, and Goldman expects this trend to continue, with monthly purchases averaging 38 tonnes through mid-2026, more than double the pre-freeze level.
Despite this positive outlook, the analysts cautioned that the risks to their forecast remain balanced.
They explained that a “higher for longer” federal funds rate represents the main downside risk, while a potential U.S. recession or “insurance cuts” could drive prices above the $3,000 mark.
Investing.com — European prices have seen a minor decrease in early trade but overall continue to remain high for the month. This is largely due to predictions of colder weather and concerns over supply following the cessation of Russian gas transit via Ukraine.
The benchmark Dutch TTF contract has experienced a 1.2% decrease, now hovering at 49 euros per megawatt hour. Last week, it had broken the 50 euros mark following the confirmation of halted Russian pipeline flows through Ukraine. This halt was due to the expiration of Gazprom (MCX:)’s transit deal.
Analysts at ING have noted that the European gas market is receiving additional support from the forecast of colder-than-usual weather for the next two weeks. This could potentially lead to a quicker-than-expected decrease in storage levels.
They further noted that while the current storage levels should be sufficient for Europe to get through this winter without issue, the refilling of storage during the injection season could prove to be a more substantial task than last year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
By Ahmad Ghaddar
LONDON (Reuters) – Oil prices steadied at their highest since mid-October as colder weather spurred buying while further support came from expectations of tighter sanctions on Iranian and Russian oil exports.
futures gained 22 cents, or 0.3%, to $76.73 a barrel by 1133 GMT, their highest since Oct. 14.
U.S. West Texas Intermediate crude was up 23 cents, or 0.3%, at $74.19 for its highest since Oct. 11.
Oil had previously chalked up five sessions of gains, buoyed by hopes of rising demand after colder weather in the Northern Hemisphere and more fiscal stimulus to revitalise China’s faltering economy.
Brent crude was supported by colder than normal weather in northwest Europe and the United States, a rally in prices and higher refining profit margins, said SEB analyst Bjarne Schieldrop.
Investors are also awaiting economic news for more clues on energy consumption and the U.S. Federal Reserve’s interest rate outlook. Minutes of the Fed’s last meeting are due on Wednesday and the December payrolls report is scheduled for Friday.
Meanwhile, Saudi Aramco (TADAWUL:), the world’s top oil exporter, has raised crude prices in February for buyers in Asia, the first increase in three months. A rise in these prices usually indicates firmer demand expectations.
On the supply front, stronger Western sanctions on Iranian and Russian oil shipments are a distinct possibility.
The Biden administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude, two sources with knowledge of the matter said on Sunday.
Goldman Sachs expects Iranian oil production and exports to fall by the second quarter as a result of expected policy changes and tighter sanctions from the administration of incoming U.S. President Donald Trump.
Output at the OPEC producer could drop by 300,000 barrels per day (bpd) to 3.25 million bpd by the second quarter, the bank said.
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