In Asian trading on Friday, gold prices remained relatively unchanged as concerns over potential signals of higher interest rates from the Federal Reserve offset stronger-than-expected inflation data. Meanwhile, copper prices rallied to new 11-month highs fueled by expectations of tighter Chinese supplies.
Despite the prevailing sentiment, copper experienced a notable surge, reaching levels not seen in almost a year. Expectations of significantly reduced Chinese supplies prompted considerable buying activity in the red metal.
On the contrary, bullion prices faced pressure due to a strengthening dollar, which reached its highest level in over a week following robust inflation readings earlier in the week. Traders also positioned themselves ahead of the upcoming Federal Reserve meeting.
Spot gold inched up 0.1% to $2,163.98 per ounce, while April gold futures held steady at $2,168.05 per ounce as of 01:17 ET (05:17 GMT).
Gold Prices Experience Decline Ahead of Fed Meeting:
Gold prices are poised for weekly losses following a sharp decline from record highs achieved earlier in the week. The retreat in gold was largely influenced by mounting concerns surrounding the Federal Reserve’s upcoming meeting, particularly in light of stronger-than-expected consumer and producer inflation data.
The prolonged uptick in inflation has raised apprehensions among traders about potential hawkish signals from the Fed. The central bank’s indication that its future interest rate adjustments will be guided by inflation trends has heightened worries, as higher interest rates typically dampen the appeal of gold and other non-yielding assets.
However, ANZ analysts remain optimistic about gold’s outlook for the remainder of the year, despite anticipating some short-term weakness. They have revised their 2024 target price for gold to $2,300 per ounce, up from $2,200 per ounce.
Other Precious Metals Perform Well:
In contrast to gold, other precious metals witnessed gains on Friday and were set to outperform gold for the week. Platinum futures rose by 0.2% to $932.50 per ounce, while silver futures increased by 0.6% to $25.212 per ounce.
Copper Surges to 11-Month Highs on Supply Shortage in China:
Three-month copper futures on the London Metal Exchange surged by 1.5% on Friday, surpassing the $9,000 per ton mark for the first time since April 2023. Similarly, one-month U.S. copper futures soared by 1.3% to $4.1022 per pound, marking an 11-month high.
This rally was primarily fueled by reports indicating that major Chinese copper smelters are considering joint production cuts, which would restrict the supply of refined copper. Citi analysts remain bullish on copper, maintaining an overweight rating with a potential upside target of up to $9,500 per ton by June 2024.