Gold prices muted as investors remain cautious about Fed's interest rate cut prospects

Gold prices were muted in Wednesday’s trading session as investors assessed slower monetary easing by the US Federal Reserve in 2025. 

Strong labour market data from the US also weighed on gold’s upside from Tuesday. 

A positive jobs market data from the US has raised concerns about whether the Fed would cut rates in the upcoming months. 

Elevated rates reduce the appeal of non-yielding metals such as gold and silver. 

At the time of writing, the February gold contract on COMEX was $2,666.24 per ounce, largely flat from the previous close. 

The March silver contract on COMEX was also flat at $30.665 per ounce. 

US economy shows strength

In the US, the services sector grew at a faster pace in December, indicating a resilient economy. 

The Institute of Supply Management’s services purchasing managers’ index increased by 54.1 in December. Analysts had estimated the figure to come in at 53.3. 

In November, the services sector PMI was at 52.1. 

Additionally, the job labour and turnover survey revealed that work openings increased from 7.839 million to 8.098 million in November.

“In the United States, the schedule revealed a strong jobs report amid an increase in job openings, reassuring investors that the labor market is solid,” FXstreet said in a report. 

China's gold reserves rise

Gold prices were supported on Tuesday after China’s central bank increased its gold reserves for the second consecutive month in December. 

China purchased 10 tonnes of gold in December, signalling that the People’s Bank of China has well and truly resumed its gold buying after a pause of six months. 

China is one of the top consumers of gold, along with India. 

If China begins to purchase gold at a brisk rate for the rest of 2025, prices of the yellow metal will get further support. 

Goldman Sachs has forecast that gold prices could end the year around $2,900 per ounce, a record high level. 

Copper price advance

Copper prices rose on Wednesday as investors waited for more economic cues from top consumer China. 

China is set to release its inflation figures for December on Thursday, which will be closely monitored as the country struggles with a property sector crisis. 

The Chinese government has pledged to boost fiscal spending this year to support the ailing economy. 

Copper prices have been volatile over the past two sessions, as reports have claimed that US President-elect Donald Trump is likely to be less aggressive with his tariff plans. 

This was, however, rebuffed by Trump later on Monday. 

The uncertainties around the tariff scenario have made the market volatile with prices swinging between negative and positive territory for the last couple of days. 

At the time of writing, the three-month copper contract on the London Metal Exchange was slightly higher at $9,004 per ton.