Europe Asia News

Metal markets saw some profit-taking after last week’s sharp rally, as uncertainty surrounding the U.S. economy increased. Ahead of the U.S. inflation data due to be released on Thursday, demand for safe-haven assets remained elevated. Disagreements in Russia-Ukraine peace talks over territorial concessions and Moscow’s frozen overseas assets provided support for safe-haven assets.

Spot gold fell 0.1% to $4,334.48 per ounce, while February gold futures declined 0.2% to $4,364.90. Spot silver rose 0.5% to $66.5095 and hovered near the record high of $66.90 reached on Wednesday. Platinum outperformed, with spot prices rising to $1,977.80 per ounce, approaching the record peak above $2,200 per ounce.

Silver and platinum significantly outperformed gold this week. Gold gained 0.7%, while silver rose more than 7% and platinum climbed 12.2%.

This week, uncertainty surrounding the U.S. economy increased, particularly as official government data sent mixed signals about the labor market. The Federal Reserve’s asset purchase operations also sparked some concerns over market liquidity.

Markets were awaiting upcoming consumer price index inflation data to gain clues about the world’s largest economy. The data were expected to show a slight increase in headline CPI inflation, while core CPI inflation was seen holding steady at an annual rate of 3%.

The labor market and inflation are known to be the two factors the Fed pays the closest attention to when adjusting policy. However, beyond interest rates, markets were also concerned about a potential period of stagflation in the U.S. economy. In such a scenario, unemployment rises alongside inflation. These concerns also led to excessive buying of gold and other precious metals.

Interest rate decisions from the Bank of England (BOE) and the European Central Bank (ECB) will be announced on Thursday, while the Bank of Japan’s (BOJ) decision will be released on Friday. The BOE is expected to cut interest rates by 25 basis points to further support the sluggish UK economy. The ECB is expected to keep rates unchanged after cutting them earlier this year, amid signs of resilience in the euro zone.

The BOJ stands out as an exception, with markets expecting a 25-basis-point rate hike. This expectation comes amid the yen’s continued weakness and the lack of a slowdown in inflation in Japan. The BOJ has also signaled that it may consider raising rates in December.

As concerns grow over slowing growth in developed economies, the focus will be on the outlooks of the three central banks for their respective economies through 2026.