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Gold prices hold steady amid Federal Reserve's interest rate warning and global economic concerns

Gold prices remained mostly steady on Monday, despite the potential for a further drop due to warnings from the Federal Reserve about prolonged higher interest rates. The strength of the dollar and yield pressures have also contributed to the situation. Over recent weeks, gold has shown minimal fluctuation in its trading range.

The Federal Reserve recently signaled that interest rates could rise again this year and may decrease less than previously anticipated in 2023, possibly remaining above 5%. This has caused investors to favor the dollar as a safe haven, as global economic conditions appear to be worsening.

Inflation is resurging in major economies due to rising oil prices, which could potentially hamper growth this year. Amid these circumstances and growing concerns about a possible U.S. government shutdown, gold has found some support.

Meanwhile, on Monday, industrial metals saw little movement due to escalating worries about additional economic challenges in China. The London Metal Exchange (LME) copper and nickel finished last week on a lower note. These concerns were amplified after China Evergrande (HK:3333) Group, a struggling property developer, announced it could not issue new debt due to an ongoing government investigation into one of its units.

China's property sector is facing a cash crunch that has persisted for three years and has received limited fiscal support from Beijing. This week, attention will be focused on Chinese purchasing managers' index data, scheduled for release on Friday, for further insights into business activity.

Oil prices rose on Monday as investors shifted their attention back to tighter supply outlooks. This shift occurred after Moscow implemented a temporary ban on fuel exports while remaining wary of potential further rate hikes that could dampen demand.

Crude oil contracts ended their three-week winning streak and fell last week following the Federal Reserve's hawkish stance which unsettled global financial sectors and raised concerns about oil demand. Prices had surged over 10% in the preceding four weeks due to predictions of a significant crude supply deficit in the fourth quarter, following Saudi Arabia and Russia's decision to extend additional supply cuts until the end of the year.

Last week, Moscow temporarily banned gasoline and diesel exports to most countries in an effort to stabilize its domestic market. More updates on stock market trends and other business, political, tech, sports, and auto news are expected to follow.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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