Copper prices rose on Monday at the Shanghai Exchange and hit fresh record highs.
Copper May futures at the Shanghai Exchange rose 2.1% today to a record 75.17 thousand yuan a tonne.
Conversely, copper futures at the London Metals Exchange fell 0.6% to $9273.50 a tonne, after a 5.2% surge last week.
However prices could be curtailed in the future as recent stellar US labor data could dissuade the Federal Reserve from cutting interest rates soon, in turn hurting growth and demand on industrial metals.
Investors await important US inflation data later this week, to gather clues about the path ahead for the Fed’s policies.
Otherwise, aluminum futures fell 0.4% at the London Metals Exchange, while lead fell 0.6%, as zinc swooned 1.9%.
The dollar index fell 0.1% as of 16:46 GMT to 104.2, with a session-high at 104.4, and a low at 104.1.
Copper futures due in May rose 0.8% as of 16:39 GMT to $4.27 a poun.
The US dollar gained ground in European trade against a basket of rivals, maintaining gains for the second straight session and moving in a positive zone.
Recent strong US labor data curtailed the odds of a Fed interest rate cut in June, with investors now awaiting US inflation data later this week to have a better picture.
The Price
The dollar index rose 0.15% to 104.44 today, with a session-low at 104.25.
The dollar index closed up 0.1% on Friday, the first profit in four days away from a two-week trough at 103.92, following excellent US labor data.
US Treasury Yields
US 10-year treasury yields rallied 0.9% today to a five-month high at 4.454%, boosting investments in the dollar.
The developments come following strong US labor data, which showed the economy added far more jobs than expected last month.
US Labor Sector
The US economy added 303 thousand new jobs in March, beating estimates of 212 thousand.
The unemployment rate fell to 3.8% from 3.9% in February, while average earnings rose to 3.0%.
Such data showed the US economy ended the first quarter on solid ground, and will likely delay the dates of upcoming Fed interest rate cuts.
US Rates
Following the data, the odds of a Fed interest rate cut at the June policy meeting tumbled from 60% to 48%.
Now investors await crucial US inflation data later this week, which could change the odds of future policy moves by the Fed.
Gold prices rose on Monday in European trade to fresh record highs, as prices stabilize above the $2300 barrier on strong haven demand as geopolitical tensions in the Middle East mount.
Such considerations overshadowed a recent surge in US 10-year treasury yields, which usually pressure non-yielding assets such as gold.
Gold is approaching the psychological level of $2400 amid strong demand from global central banks and major investment funds.
Prices Today
Gold prices rose over 1% to $2337 an ounce, a record high, with a session-low at $2303.
Prices rallied 1.7% on Friday, the eighth profit in nine days, scaling a fresh record high.
The yellow metal rallied 4.3% last week, the third weekly profit in a row, and the largest since early March on strong haven demand.
Haven Demand
Massive investments are pouring into gold as investors seek safe havens amid mounting Middle East tensions.
Israel today announced the withdrawal of some of its troops from southern Gaza to redeploy them in preparations for the Rafah ground attack.
At the same time, the Islamic Republic of Iran is preparing for a counterattack against Israel after the latter's alleged attack on the Iranian consulate in Syria.
US Yields
US 10-year treasury yields rose 0.9% on Monday, scaling a five-month high at 4.454% and pressuring non-yielding assets.
The developments come after strong US labor data last Friday, which blew past expectations.
The US economy added 303 thousand new jobs in March, beating estimates of 212 thousand.
The unemployment rate fell to 3.8% from 3.9% in February, while average earnings rose to 3.0%.
Such data showed the US economy ended the first quarter on solid ground, and will likely delay the dates of upcoming Fed interest rate cuts.
US Rates
Following the data, the odds of a Fed interest rate cut at the June policy meeting tumbled from 60% to 48%.
Now investors await crucial US inflation data later this week, which could change the odds of future policy moves by the Fed.
Gold Performance Projections
JPMorgan's analysts foresee gold prices hitting $2500 an ounce this year.
Goldman Sachs' analysts project a minimum price target of $2300 an ounce for this year, anticipating policy easing by the Federal Reserve.
The SPDR
Gold holdings at the SPDR Gold Trust fell by 6.04 tonnes on Friday to a total of 826.41 tonnes, the lowest since March 13.
Euro rose in European trade on Monday against a basket of major rivals, resuming gains against the dollar and approaching two-week highs anew, with the ECB expected to maintain interest rates unchanged this year.
Now markets await the European Central Bank’s meeting this week to gather more clues about the prospects of rate cuts in June, especially following recent encouraging European inflation data.
Many analysts expect the EUR/USD pair to continue trading above the $1.08 barrier this week, ahead of the US inflation data on Wednesday.
The Price
EUR/USD rose 0.1% today to 1.0843, with a session-low at $1.0823, after losing 0.1% on Friday on profit-taking off a two-week high at $1.0877.
Euro has also lost ground after strong US labor data last week, which hurt the odds of a Fed interest rate cut in June.
Nonetheless, the euro managed to snag a 0.4% profit against the dollar last week, the first such weekly profit in a month.
The ECB
Later today, the European Central Bank’s policy meeting will commence, with decisions awaited tomorrow, expected to maintain interest rates unchanged for the fifth straight meeting.
The ECB is likely to pave the way and prepare the market for the likely interest rate cut in June.
ECB President Christine Lagarde will also likely assert that any rate decision will fully depend on data.
EUR/USD Outlook this Week
Italian bank UniCredit’s analysts believe that the EUR/USD will maintain its momentum this week and hold ground above 1.08.
The Commonwealth Bank’s analysts also don’t see high risks facing the EUR/USD pair as markets have already fully priced in the expected ECB rate cut in June.