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Gold prices experienced an upward trend during Asian trading on Tuesday, building upon recent gains attributed to escalating geopolitical tensions in Syria and a decline in Wall Street equities, which heightened the appeal of gold as a safe haven asset.
In the realm of industrial metals, copper prices showed signs of stabilization despite having faced significant losses over the past two months. This steadiness comes after substantial gains spurred by renewed promises of economic stimulus from China, a key global importer of copper.
Nonetheless, expectations for crucial economic indicators in the days ahead are tempering further price increases in the metals market. The U.S. dollar remained relatively stable as market participants await important inflation data set to be released on Wednesday.
Gold prices climbed by 0.4% to $2,671.62 per ounce, while February futures settled at $2,694.69 per ounce, up 0.3% as of 23:30 ET (04:30 GMT).
Gold Demand Driven by Geopolitical Instability
Spot gold surged approximately 1% on Monday amid increased tensions in the Middle East, which prompted investors to seek refuge in traditional safe-haven assets.
The takeover of Syria’s capital, Damascus, by rebel forces over the weekend marked the end of President Bashar al-Assad’s regime, which has since sought asylum in Russia. This regime change is intricately linked to the Sunni Islamic sect, potentially straining Syria’s relations with Iran. Furthermore, Israel was reported to be carrying out military operations against Syrian positions.
The turmoil in Syria has heightened investor anxiety regarding a potential escalation of geopolitical conflicts in the Middle East, encouraging a flight to secure assets like gold.
This trend was reinforced by losses seen on Wall Street overnight, where major tech stocks retreated significantly from prior gains. Investor sentiment remains cautious in anticipation of key economic data in the coming days, particularly as the central banks of Canada, the European Union, and Switzerland prepare to announce their interest rate decisions, followed by the Federal Reserve next week.
In contrast to gold’s performance, other precious metals showed less vigor. Silver prices dipped by 0.4% to $944.85 per ounce, while platinum steadied at $32.620 per ounce.
Copper Stabilizes Following Stimulus-Driven Surge; Positive Import Data from China
Copper prices on the London Metal Exchange decreased by 0.3% to $9,211.0 per ton, with February futures falling by 0.2% to $4.2542 per pound.
These contracts enjoyed a rally of 1.5% on Monday, fueled by commitments from China’s high-level political body to adopt a more relaxed monetary policy and implement targeted stimulus measures. This development has significantly enhanced expectations for improved economic growth within China, which in turn is likely to elevate its demand for commodities.
Positive insights were also gleaned from recent Chinese trade data. While overall figures for imports and exports fell short of analysts’ expectations for November, copper imports surged to a one-month high, indicating potential resilience in demand.
This week, all eyes are on China’s Central Economic Work Conference, which is scheduled to commence on Wednesday, as stakeholders look for further guidance on the nation’s economic policies and outlook.
Source
www.investing.com