Gold prices cut losses on Tuesday as the dollar paused its rally, while Treasury yields fell.
Silver also fell 1%, but losses were trimmed, tracking the movement in gold.
Meanwhile, oil prices fell sharply as concerns over oversupply engulfed the market.
Gold trims losses
On Tuesday, gold prices recovered some losses. This rebound was supported by a halt in the dollar’s appreciation and a decrease in Treasury yields.
Investors are now looking ahead to US economic data expected this week for further direction on future interest rate movements.
Gold is now more affordable for foreign currency holders as the dollar index, which measures the dollar against other major currencies, has eased after reaching a three-month high.
Furthermore, benchmark US 10-year yields have retreated from their three-week high set on Monday.
The US Federal Reserve recently implemented its second interest rate cut of the year.
However, Federal Reserve Chair Jerome Powell indicated that a further rate reduction in the current year is “not a foregone conclusion.”
Consequently, market expectations for a December rate cut have diminished.
According to the CME’s FedWatch Tool, the perceived probability of another rate cut this year has decreased to 65% from over 90% prior to Powell’s statement.
Gold, a non-yielding asset, typically performs well when interest rates are low and economic outlooks are uncertain.
This week, investors are focused on upcoming economic data, specifically the ADP US employment figures on Wednesday and the ISM PMIs, for any signals regarding potential interest rate cuts.
At the time of writing, the gold contract on COMEX was at $3,986.85 per ounce, down 0.7%. Silver was down 1.5% at $47.315 per ounce.
Oil slips
Crude oil prices dropped more than 1% on Tuesday, influenced by several factors.
The Organization of the Petroleum Exporting Countries and its allies’ decision to halt output increases for the first quarter of next year, combined with disappointing manufacturing data and a strengthening dollar, all put downward pressure on the market.
OPEC+ announced on Sunday a modest increase in oil output for December.
They also agreed to halt further increases during the first quarter of the following year.
“Sanctions on Russian producers have injected a new layer of uncertainty into supply forecasts, and the group knows that overproducing now could backfire later,” Rystad Energy’s head of geopolitical analysis, Jorge León said in an emailed commentary.
By pausing, OPEC+ is protecting prices, projecting unity, and buying time to see how sanctions play out on Russian barrels.
According to independent analyst Tina Teng, sanctions against Russia’s Rosneft and Lukoil may offer some near-term price support for oil, even with the current decline in prices.
Manufacturing activity in Japan experienced its sharpest decline in 19 months in October, according to a private-sector survey.
This contraction was driven by a slump in demand within key sectors like automotive and semiconductors across Asia.
Focus is currently on the forthcoming US inventory data from the American Petroleum Institute (API), scheduled for release later on Tuesday.
The West Texas Intermediate crude oil was at $60.23 per barrel, down 1.3%, while Brent was 1.2% lower at $64.11 a barrel.
Copper
Copper prices fell sharply on Tuesday as the dollar was firm against a basket of major currencies.
A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers.
At the time of writing, the three-month copper contract on the London Metal Exchange was down 1.6% $10,671 per ton.
Chile’s largest copper producer, according to its chairman, anticipates a rise in mine production this year and next, surpassing last year’s figures.
The production drop, caused by a significant accident at a key company mine (El Teniente), is surprising.
Despite accounting for 23% of global copper ore production last year, the country’s mine production remains approximately 3% lower than the previous year’s level, based on statistics office data through September.
“If Chile’s largest mining producer is indeed able to significantly expand its production in the coming months, this could significantly alleviate current concerns about a shortage of raw materials and weigh on the price of copper,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a report.
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