Spot gold prices (XAUUSD:CUR) inched lower for a second-consecutive session on Wednesday, as investors dialed back expectations for a March rate cut from the U.S. Federal Reserve, and awaited comments from more Fed members this week. “Gold appears to have built solid support above $2,000 an ounce, but momentum to move higher in the short term has eased with uncertainty about the timing of Federal Reserve rate hikes,” according to Money Metals Exchange.
“Long positions in gold futures in the managed money category fell by 20,051 contracts to 134,333. It’s important to understand the broader trajectory of the economy as we consider where gold might go in the longer term.”
Meanwhile ECB policymakers this week have tried to beat down market expectations of rate cuts, maintaining a cloud of uncertainty over the timing of the moves. Although gold is seen as a hedge against inflation, higher interest rates dull non-yielding bullion’s appeal.
Saxo Bank said, silver continues to trade near a ten-month low relative to gold on a combination of a weak start to the year for industrial metals amid global economic growth concerns and lack of strong stimulus initiatives in China.
In the energy complex, both benchmarks were down more than 1% each following China’s economic growth figures, which raised concerns about future demand in the world’s second biggest economy. China’s economy saw a less-than-anticipated growth in Q4 due to ongoing challenges such as sluggish consumer spending and a decline in the real estate sector. Traders also weighed the ongoing conflicts in the Red Sea. U.S. crude oil futures closed lower Tuesday, as traders appeared more worried about demand shortfalls than potential supply shortages from escalating tensions in the Middle East.
Among base metals, copper fell after data from top consumer China underlying its economic weakness exacerbated demand concerns, with a firm U.S. dollar also hurting the metal. A steady dollar also weighed on the market, as a stronger dollar makes the greenback-priced commodity more expensive for buyers.
Elsewhere among agriculture commodities, soybean and cocoa prices fell, while wheat futures gained.
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