In Asian trading on Monday, gold prices experienced a slight decline but remained close to their two-month highs, propelled by increasing expectations of U.S. interest rate cuts this year. However, with key Federal Reserve signals and significant economic data releases scheduled for later in the week, the precious metal may see subdued movement in the near term.
Here are the key highlights:
Gold Performance: Spot gold edged down by 0.1% to $2,080.86 per ounce, while gold futures expiring in April retreated by 0.3% to $2,089.25 per ounce. Both spot and futures prices surged by over 2% during the previous week, reaching their highest levels for 2024 and breaking out of the trading range established earlier in the year.
Factors Driving Gold: Gold’s recent gains were primarily driven by softer U.S. economic data, which heightened expectations of potential interest rate cuts by the Federal Reserve by June. However, anticipation of further guidance from the central bank led traders to adopt a cautious stance, resulting in a slight pullback in gold prices.
Other Precious Metals: Platinum futures declined by 0.4% to $888.70 per ounce, while silver futures dropped by 0.5% to $23.240 per ounce on Monday.
Upcoming Fed Testimony and Data Releases: Market focus is on the two-day testimony by Federal Reserve Chair Jerome Powell this week, during which investors anticipate additional insights into the trajectory of interest rates. Powell is expected to maintain a hawkish stance, emphasizing the need for convincing evidence of inflation reaching the Fed’s target. Additionally, attention will be on the release of key nonfarm payrolls data for February on Friday, with labor market conditions influencing the Fed’s decision-making process.
Copper Prices: Copper futures for May delivery decreased by 0.4% to $3.8443 per pound as markets adopted a cautious approach towards the industrial metal ahead of signals from China, the top importer of copper. China’s National People’s Congress, scheduled for Tuesday, is expected to unveil additional stimulus measures and economic forecasts for 2024. Despite concerns about slowing Chinese demand, surging growth in India is anticipated to offset the slowdown, with sustained infrastructure spending driving up copper demand in the country.
The outlook for gold remains influenced by developments in the global economy, central bank policies, and geopolitical factors, with investors closely monitoring upcoming events and data releases for further direction in the precious metal market.