Gold prices fell in Asian trade on Thursday, pressured by a stronger U.S. dollar and rising Treasury yields as traders remained cautious ahead of key economic data likely to influence interest rate decisions.
The U.S. dollar surged to a more than two-week high as concerns over sustained high U.S. interest rates kept traders favoring the greenback. Concurrently, benchmark U.S. Treasury yields increased this week.
This trend prompted investors to move out of gold, pushing the metal further from record highs reached last week. Gold also relinquished most of its gains accumulated earlier in the week.
Spot gold decreased by 0.2% to $2,332.98 per ounce, while gold futures dropped 0.4% to $2,331.60 per ounce just ahead of their June 1 expiry.
Gold Prices Under Pressure as Rate Cues Approach
The yellow metal faced pressure from anticipated U.S. economic data in the coming days, which are expected to influence interest rate outlooks.
A revised reading on first-quarter gross domestic product (GDP) data, due later on Thursday, is likely to show some economic resilience. A strong economy provides the Federal Reserve with more leeway to maintain higher interest rates for an extended period.
The Personal Consumption Expenditures (PCE) price index data, the Fed’s preferred inflation measure, is scheduled for release on Friday and will be closely watched.
These data releases come after several Fed officials indicated that the bank is not confident enough to start reducing interest rates, leading traders to adjust their expectations for a rate cut in September.
The prospect of prolonged high interest rates negatively impacts gold and other precious metals by increasing the opportunity cost of holding these non-yielding assets.
Other precious metals also declined in response to this outlook. Platinum futures fell 0.6% to $1,040.15 per ounce, while silver futures dropped nearly 2% to $31.767 per ounce.
Copper Rally Cools as Traders Await More China Data
Among industrial metals, copper prices continued to fall from recent highs on Thursday as speculative buying cooled and traders awaited further cues on demand from key economic data from China, the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange declined by 1.3% to $10,346.50 per tonne, while one-month copper futures fell 1.1% to $4.7237 per pound.
China’s Purchasing Managers’ Index (PMI), due on Friday, is expected to provide more insights into business activity in the country, helping traders better assess the outlook for copper demand.