In the Asian trading session on Monday, gold prices remained largely unchanged, showing minimal movement as traders continued to anticipate higher U.S. interest rates ahead of the upcoming Federal Reserve meeting.
The precious metal had retreated from its record highs reached earlier in April, as demand for safe-haven assets subsided amidst the absence of escalating tensions between Iran and Israel. This lack of geopolitical turmoil left gold susceptible to outflows amidst the backdrop of a tightening U.S. monetary policy.
Spot gold stabilized at $2,334.66 per ounce, while gold futures expiring in June hovered around $2,345.60 per ounce by 01:10 ET (05:10 GMT).
A resilient U.S. dollar exerted further pressure on gold, particularly following a stronger-than-anticipated reading on the PCE price index, the Federal Reserve’s preferred inflation gauge.
With indications of persistent inflationary pressures in the U.S., market expectations for early rate cuts by the Federal Reserve have significantly diminished. The central bank is now anticipated to commence rate adjustments in September, or possibly even in the fourth quarter.
All eyes are now on the upcoming Federal Reserve meeting for insights into the central bank’s rate policy trajectory.
The prospect of sustained higher interest rates poses challenges for gold, as it increases the opportunity cost of holding the precious metal. Nonetheless, despite recent declines, gold prices remain positive for the year, driven by lingering concerns that elevated interest rates could dampen global economic growth.
In other precious metals markets, platinum futures experienced a modest uptick of 0.6% to reach $930.05 per ounce, while silver futures rose by 0.3% to $27.613 per ounce after enduring significant losses over the past two weeks.
Meanwhile, copper prices surged to two-year highs on Monday, propelled by optimism regarding robust Chinese demand following Beijing’s decision to ease restrictions on house purchases in major cities to support the property market.
China’s property sector plays a pivotal role in its economy and serves as a primary driver of copper demand in the world’s largest importer of the metal.
Three-month copper futures on the London Metal Exchange climbed by 0.4% to $10,015.0 per ton, marking their highest level since early May 2022. Additionally, one-month copper futures increased by 0.2% to $4.5962 per pound.
Anticipation surrounding key Chinese purchasing managers index data scheduled for release later this week is expected to provide further insights into the demand dynamics of the world’s leading copper importer.