Gold Falls As The U.S. Federal Reserve And CPI Week Start

Gold prices slipped slightly below key levels on Monday, as caution set in ahead of vital U.S. inflation data and a Federal Reserve meeting this week, while COVID-19 cases in China pushed copper prices lower.

According to data released last week, U.S. producer price inflation fell further in November, albeit at a slower rate than anticipated. Consequently, bullion prices increased, but to a lower level than predicted. Tuesday's report of the consumer price index may reveal a similar pattern, based on this outcome.

This year, growing U.S. inflation spurred the Federal Reserve to conduct a series of quick interest rate hikes, which had a considerable negative impact on metal markets by raising the opportunity cost of holding non-yielding assets.

On Wednesday, the central bank is anticipated to conclude a two-day meeting during which it will raise interest rates by an extremely tiny 50 basis points. However, the direction of U.S. inflation will have a significant impact on the extent of future rate hikes.

As of 19:30 EST, spot gold fell 0.2% to $1,793.72 per ounce, while gold futures fell 0.3% to $1,804.95 per ounce (00:30 GMT). Traders remained cautious ahead of this week's crucial data releases, keeping the yellow metal's price mostly flat last week.

Platinum prices decreased 1.7% on Monday, while silver futures decreased 0.5%.

The markets are wary of any indications that U.S. inflation stayed higher than anticipated in November, since this might lead to further rate hikes by the Federal Reserve. The central bank has warned that if inflation proves to be persistent, U.S. interest rates may peak at higher-than-anticipated levels.

The dollar rose moderately on Monday in anticipation of U.S. economic data, with further support from PPI inflation data that above market forecasts.

Following two consecutive weeks of gains, copper prices decreased on Monday as COVID-related uncertainty in China grew.

Copper futures fell 0.4% to $3.8412 a pound.

China loosened a number of statewide anti-COVID regulations last week, a move that is anticipated to gradually stimulate the world's second-largest economy.

Scientists have cautioned, however, that the loosening of COVID limitations is likely to result in a rise in infections in the near future, which might delay the total removal of restrictions.

This has raised doubts about the timing of an economic recovery in the world's largest copper importer.

The outlook for copper, which normally flourishes in high-growth environments, has also been impacted by deteriorating economic data from a number of key nations.