Gold prices rose in European trade on Tuesday, resuming gains and moving off recent record highs as US treasury yields lost ground.

Recent cautious remarks by Fed Chair Jerome Powell, and weak data in the US manufacturing sector boosted the odds for an interest rate cut in March 2024. 

Gold Prices Today

Gold prices rose 0.6% to $2,041 an ounce, with a session-low at $2,028, after losing 2% yesterday on profit-taking away from record highs at $2,146. 

Such strong gains came amid prospects of early interest rate cuts in the US, and strong demand on gold as safe haven amid growing geopolitical concerns in the Middle East. 

US Yields 

US 10-year treasury yields fell 0.6% on Tuesday, resuming losses and approaching three-month trough at 4.197%. 

Weaker US treasury yields underpin non-yielding assets such as gold. 

Such developments came following a batch of bearish remarks by Fed officials and soft data. 

Powell

Fed Chair Jerome Powell said on Friday that it's clear the monetary policy is slowing the economy down as expected, with interest rates reaching appropriate tightening levels, however he still opened the way for further policy tightening if needed

US Manufacturing Sector 

Powell's remarks came after data showed the US manufacturing sector remained soft in November, showing the impact of US policy tightening.

The ISM Institute showed the manufacturing PMI remained at 46.7 in November, the 13th month in a row of a result below 50, which separates contraction from growth.

US Rates

Odds for a US interest rate hike at the December Fed meeting fell to just 2.5%

Odds for an interest rate cut by the Fed in March surged to 64%, while odds for a cut in May surged to 90%.

The SPDR 

Gold holdings at the SPDR Gold Trust rose 2.3 tonnes yesterday to a total of 881.12 tonnes, the highest since November 22. 

Euro fell in European trade on Tuesday against a basket of major rivals, extending losses for the fifth straight session against the dollar and hovering near three-week lows following cautious remarks by ECB officials.

Such remarks bolstered the case of early interest rate cuts by the European Central Bank in 2024, which could widen the interest rate gap with the US Federal Reserve. 

EUR/USD

EUR/USD fell 0.15% today to 1.0820, with a session-high at 1.0848, after losing 0.4% on Monday, the fourth loss in a row, plumbing a three-week trough at 1.0804 as ECB officials welcome recent inflation data. 

Euro zone consumer prices rose 2.4% in November, the lowest rate in 28 months, and very close to the 2% target.

Cautious Remarks 

European Central Bank member Isabel Schnabel said on Tuesday that more interest rate hikes in the euro zone "are unlikely", following the inflation data in November. 

She said the data shows that inflation is losing steam but without the risk of long-term recession with it. 

She believes that inflation is going in the right tract but there's need for progress in other major sectors. 

She believes the current level of interest rates is tight enough to bring inflation to 2% by 2025. 

Gold prices fell on Monday as the dollar index rose against most major rivals, moving away from record highs scaled earlier in the session. 

Later this week, the all-important US payrolls report will be released later this week. 

Fed Chair Jerome Powell said last week that inflation hasn't be fully controlled yet and talk about interest rate cuts are too early. 

Otherwise, the dollar index fell 0.4% to 103.6 as of 17:23 GMT, with a session-high at 103.8, and a low at 103.06. 

On trading, gold spot prices fell 2% as of 17:14 GMT, or $41.4, to $2,048 an ounce away from a record high at $2152.30 an ounce. 

Copper prices fell on Monday as the dollar rose against a basket of major rivals, amid growing concerns about increasing inventories at the London Metals Exchange. 

Copper standard futures fell 1.3% at the London Metals Exchange to $8500 a tonne, away from a four-week high at $8640. 

As the dollar rose, it made dollar-denominated metals futures costlier to holders of other currencies.

Copper inventories at the London Metals Exchange rose on Friday to 174.900 tonnes, becoming nearly 225% higher from July levels.

Otherwise, China reported mixed data for factory activities in November, raising doubts about demand, while data on commerce and inflation will be released later today.

Technically, copper is standing at $8,445, at the 200-day SMA, with a resistance at $8640. 

Copper found some support from the disrupted supplies in Panama, as the First Quantum company suspended operations at its mine, representing 1% of global supplies. 

Nickel prices rose today on active short-covering away from March 2021 lows plumbed recently at $15,840. 

Aluminium fell 0.7% to $2193 a tonne, while zinc fell 1.4% to $2474, as lead rose 0.5% to $2130, while tin rose 0.5% to $23880. 

The dollar index rose 0.5% as of 16:36 GMT to 103.7, with a session-high at 103.8, and a low at 103.06.

Copper futures due in March fell 2.4% to $3.83 a pound as of 16:30 GMT.