Gold breaks below the $2,000 support level after CPI data sparked concerns about interest rates

Investing.com – Gold prices fell below key support levels in Asian markets today. After reporting stronger-than-expected inflation in January, this has sparked growing concern that the Fed will keep interest rates higher for longer.

Gold fell further after spot prices fell below the support level of $2,000 per ounce. This was followed closely on Tuesday. Analysts warned of further declines after losing key support levels.

Traders also reduced their bets on an early Fed rate cut. This leaves gold with little chance of recovery in the short term. It rose to a three-month high after Tuesday's report. Which is still putting pressure on gold

The April indices were down slightly to $1,992.64 an ounce, while the April indices were down 0.1% to $2,005.05 an ounce as of 00:06 EST (05:06 GMT), with both indices losing more than 1. % Tuesday.

Spot gold prices fell below $2,000 per ounce for the first time since mid-December.

James Stanley, chief strategist at FOREX.com, said $1,975 to $1,978 per ounce is likely the next support level for gold. This is because it was the last support level gold saw before the Fed meeting in December.

Severe inflation is weighing on interest rate bets in May and June, and the outlook for gold is uncertain.

Tuesday's inflation data (CPI) showed that US inflation expanded more than expected in January. This confirms recent warnings from the Federal Reserve that stable inflation will prevent the bank from cutting interest rates.

It shows traders cutting their bets on interest rate cuts in May and June. However, traders are still betting that there is a 51% chance of a 25 basis point rate cut in June.

However, the possibility of higher interest rates for a longer period is bad for gold. This is because higher interest rates increase the opportunity cost of investing in gold. This trend has limited the rise in gold prices over the past two years.

Gold made limited progress as prices rose above $2,050 an ounce in the latest session. This is despite an increase of about 10% in 2003.

Copper prices are heading to their lowest levels in 3 months amid dollar pressure

Among industrial metals, copper prices recorded further losses today. It returned to its lowest level in 3 months due to the strength of the dollar. Economic growth tends to slow down

The March price fell 0.5% to $3.6922 per pound. It is trading near its weakest level since mid-November.

The prospect of a prolonged period of higher interest rates also weighs on concerns about a slowdown in copper demand. This is because economic activity tends to slow in a high interest rate environment.

Copper prices remain fragile after the discovery of large copper veins in Zambia. This is expected to ultimately increase global supply. But it is expected that it will take a long time for this ore line to turn into a full-scale mine.

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