In Asian trading on Tuesday, gold prices experienced marginal declines, reflecting cautious sentiments among traders awaiting crucial signals concerning U.S. inflation dynamics and the Federal Reserve’s stance. The recent strength of the dollar also exerted pressure on gold prices.
Meanwhile, copper prices witnessed significant declines since Monday, as traders opted to secure profits following a surge to 11-month highs last week. Additionally, deteriorating sentiment towards China, a top importer of copper, contributed to the downward pressure on copper prices.
Last week, gold retreated from record highs, prompted by dovish indications from major central banks, which spurred a widespread shift towards the dollar, resulting in the dollar index reaching a one-month peak. Although the dollar witnessed some profit-taking this week, it retained its relative strength.
Spot gold remained stable at $2,171.90 per ounce, while gold futures expiring in April dipped 0.2% to $2,172.45 per ounce by 00:25 ET (04:25 GMT).
Gold prices are awaiting the release of the PCE price index data on Friday, which serves as the Fed’s preferred inflation metric. This data is expected to influence the Fed’s interest rate outlook. Notably, gold may encounter resistance in the short term if persistent inflation figures suggest potential delays in the Fed’s plan to reduce interest rates this year. Last week, the central bank signaled its intention to trim rates by 75 basis points in 2024, contingent upon inflation trends.
Furthermore, market participants are attentive to forthcoming comments from key Fed officials, including Chair Jerome Powell and FOMC member Mary Daly, later this week. Any indications of prolonged higher interest rates are likely to weigh on metal markets.
In addition to gold, other precious metals experienced declines on Tuesday. Platinum futures dropped 0.2% to $914.60 per ounce, while silver futures slipped 0.4% to $24.802 per ounce.
Turning to copper, three-month copper futures on the London Metal Exchange retreated 0.3% to $8,839.00 per ton, while one-month U.S. copper futures declined 0.4% to $3.9947 per pound. Both contracts retreated significantly from the 11-month highs recorded last week, as recent Chinese inventory data indicated ample copper stockpiles in the largest importing nation. This data offset positive signals from leading Chinese copper refiners, who expressed intentions to curtail production and tighten global supplies. Moreover, worsening sentiment towards China amid investor impatience over additional stimulus measures further dampened copper prices, as the country’s economic recovery showed limited progress.