Copper Is Bullish As Gold Hovers Around $1,880 Before U.S. CPI News

On Thursday, gold prices hovered near an eight-month high as markets prepared for U.S. inflation data expected to fall further, while copper prices rose to a seven-month high due to rising optimism about China.

The U.S. consumer price index inflation numbers released later in the day are expected to show that inflation declined more in December than in November, requiring the Federal Reserve to take fewer hawkish actions after a rapid interest rate increase through 2022.

As high interest rates on non-yielding assets ease, bullion prices should rise. Lower inflation may force the Fed to suspend rate hikes, according to markets.

At 19:06 E.T., spot gold was constant at $1,876.41, while gold futures were muted at $1,879.50. (00:06 GMT). After a strong start, both assets traded at eight-month highs.

Gold prices rose due to fears of a recession and bets that the currency had peaked.

Gold has risen since 2022, but U.S. interest rates are at their highest since the 2008 financial crisis. This and the volatility of U.S. interest rate peaks will limit gold's near-term price appreciation.

December inflation is expected to drop but remain over the Fed's yearly target. Fed policymakers worry that interest rates may stay high for a long time, pressuring metal prices.

On Thursday, industrial metals like copper fell below their mid-June highs. Due to confidence about China's economic revival, the red metal has risen almost 10% this year.

Early Asian copper prices fell 0.1% to $4.1730 per pound. As Peru, the second-largest copper producer in the world, confronts greater political instability, the metal is expected to benefit from tighter supply.

China, the world's largest copper importer, reopened its borders this week after three years. COVID-19 instances have skyrocketed, clouding the nation's economic outlook.