Gold: Range-bound outlook with Fed headwinds – ING
ING’s commodities team reports Gold eased as markets digest the Federal Reserve’s first rate hike since 2023 and guidance for prolonged restrictive policy. They stress that higher rates remain a headwind, but ETF holdings at six‑month highs and ongoing central bank buying should cushion downside.
ING’s commodities team reports that gold has eased as markets digest the Federal Reserve's first rate hike since 2023 and guidance for sustained restrictive policy. They emphasize that higher rates remain a headwind but note that ETF holdings are at six-month highs and ongoing central bank buying should help limit downside. LME copper is holding above $14,500 per tonne, driven by strengthening Chinese demand; the Yangshan premium reached $124/t, the highest level since November 2022, indicating heightened import appetite.
Copper has climbed over 16% this year due to supply constraints, primarily from increased US imports and potential refined copper tariffs. Near-term price action for copper is expected to remain range-bound as supply risks offset macro headwinds and markets await clearer guidance on US trade policy. Meanwhile, AUD/USD remains steady above 0.7100 in the Asian session, and the PBOC's steady stance on loan prime rates weighs on the Australian dollar.
However, expectations of another RBA rate hike continue to support the AUD ahead of the Trump-Xi Summit. USD/JPY dips below 157.00 in Asia, pressured by slight yen strength and potential intervention following the Bank of Japan's recent rate check. A Japanese holiday also contributes to market uncertainty amid ongoing Russia-Ukraine and Middle East tensions.
Gold continues to trade around $4,350, down over 0.50% for the day, but remains above a six-week low as investors await further developments from the Middle East crisis and its impact on inflation. Financial markets face an uncertain final quarter of the year, with volatility persisting, yet the oil price declines, and both European and US stocks look set to open higher later on Monday.
Market concerns are concentrated in sovereign bonds, and European and US yields climbed again late Friday, moving higher. The Bank of Japan (BoJ) raised its short-term interest rate target to 1.25% from 1.00% in a 7-2 vote, reflecting further normalization of monetary policy and aligning with expectations that had been anticipated for weeks.
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