![Gold prices fall due to suspicions of interest rate cuts.Copper takes a hit due to China's weakness](https://i-invdn-com.investing.com/news/LYNXMPED0M02I_L.jpg)
![Gold prices fall due to suspicions of interest rate cuts.Copper takes a hit due to China's weakness](https://i-invdn-com.investing.com/news/LYNXMPED0M02I_L.jpg)
©Reuters.
Investing.com — Gold prices widened in Asia trade on Wednesday as hawkish signals from U.S. Federal Reserve officials further heightened doubts that the central bank will cut interest rates early. Meanwhile, a rebound in the dollar also pushed down prices.
Among industrial metals, copper prices were near a one-month low after China, its biggest importer, had only moderate economic growth.
Gold prices rose to $2,050 an ounce on Tuesday after Federal Reserve President Christopher Waller expressed caution about rate cuts and said the recent strength of the U.S. economy would likely delay any potential rate cuts. fell from the level.
His comments sent Treasury yields to a one-month high and caused a spike in bond yields, with yields above 4%.
The prospect of a prolonged period of higher U.S. interest rates has largely offset recent demand for gold as a safe-haven asset, prompting traders to pivot away from the yellow metal and toward the dollar.
By 12:20 a.m. ET (5:20 p.m. Japan time), shares fell 0.4% to $2,022.90 an ounce due in February. Both instruments each fell more than 1% on Tuesday.
More U.S. economic data awaited as traders drop expectations for a March rate cut
The market is now focused squarely on the upcoming data for December, which will be released later on Wednesday. Signs of strength in the U.S. economy, especially in consumer spending, would give the Fed more leeway to keep interest rates steady for an extended period of time.
Traders were seen slightly lowering their bets on the central bank's March interest rate cut, the paper said. The probability that the market will cut interest rates by 25 basis points (bp) is 62.8%, down from 66.1% the day before.
Rising interest rates raise the opportunity cost of investing in bullion, limiting capital inflows into gold as traders seek better yields on bonds. This trend has weighed heavily on the yellow metal over the past two years.
There was safe-haven demand for gold following the escalation of military action in the Middle East, but this was also offset by traders seeking the dollar as a safe-haven.
Still, the yellow metal is expected to benefit from an eventual decline in U.S. interest rates this year.
Copper falls as China's GDP misses expectations
The exchange rate for March maturities fell 0.5% to 1 pound to $3.7492, putting the lowest level since early December in sight.
The red metal was hit by a fresh wave of selling after data showed China's growth in the fourth quarter was slightly weaker than expected.
Although the government's target of 5% for 2023 was still achieved, this was mainly due to the lower comparison base from 2022. Other weak indicators in December also showed a weak trend for China heading into 2024.
Copper prices have come under new pressure in recent weeks as markets worry that China's deteriorating economic situation will weigh on demand. A decline in global demand for electric vehicles is also clouding the outlook for copper demand.
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