Investing.com – Gold prices rose in Asian trading on Monday, as traders cautiously awaited US President-elect Donald Trump's inauguration speech, anticipating insights into his administration's policies and possible signals about future interest rates.
CFD futures rose 0.3% to $2,709.3 an ounce, while contracts expiring in February rose 0.1% to $2,750.01 an ounce by 01:13 ET (06:13 GMT).
Traders are bracing for volatility with the incoming Trump administration
Gold traders are bracing for increased volatility as Trump begins his second term, with his expected political announcements expected to impact market dynamics.
The precious metal, traditionally seen as a safe-haven asset, saw prices stabilize near a one-month high, supported by weak US inflation data that raises expectations for further interest rate cuts from the Federal Reserve.
Market sentiment is currently shaped by the interaction between potential shifts in US policy and the Federal Reserve's monetary stance. Analysts point out that a strong start to Trump's term could further support the dollar, while a gradual approach could weaken it, thus affecting gold prices.
The index was 0.3% weaker in Asian trading hours on Monday, providing support to the yellow metal.
A weak dollar usually sends gold prices higher because it makes the metal cheaper for buyers using other currencies.
In addition, recent data indicating an easing of price pressures has led investors to expect more flexible monetary policy, which has traditionally supported gold prices.
Despite these factors, gold's gains have been affected by geopolitical developments, such as the ceasefire agreement between Israel and Hamas, which could impact safe-haven demand.
As the market navigates these complexities, traders remain vigilant, closely monitoring Trump's moves to assess their impact on gold's path.
Other precious metals were largely weak. Futures were unchanged at $965.25 an ounce, while rising 0.4% to $31.25 an ounce.
Copper fell as concerns over trade tariffs weighed
Among industrial metals, copper prices were weak due to a combination of expected US tariffs, the possibility of a higher dollar, and investor caution ahead of Trump’s inauguration, which weighed on the red metal.
While increased imports from China and lower inventory levels have provided some support to copper prices, traders remain cautious.
During periods of escalating tariffs and trade tensions, such as in mid-2018 and mid-2019, copper prices fell sharply as investors expected lower demand from China, the world's largest copper consumer.
The London Metal Exchange benchmark fell 0.3% to $9,166.00 per tonne, while February also fell 0.3% to $4,341 per pound.
