Gold prices remained relatively stable around the $2,300 mark in Asian trading on Wednesday, as market participants awaited crucial signals from the Federal Reserve’s interest rate decision and inflation figures.
The precious metal saw little movement amidst a backdrop of uncertainty, with traders adopting a cautious stance ahead of the Fed meeting and the release of Consumer Price Index (CPI) data. Recent sessions have witnessed a notable decline in gold prices, fueled by diminished expectations of U.S. rate cuts in light of persistent inflationary pressures and a robust labor market. The strengthening U.S. dollar, alongside rising Treasury yields, exerted further pressure on gold prices.
Spot gold edged down marginally by 0.1% to $2,313.76 per ounce, while gold futures for August delivery saw a modest uptick of 0.2% to $2,330.10 per ounce as of 00:46 ET (04:46 GMT).
With gold hovering around the crucial support level of $2,300, investors are closely eyeing the outcome of the Federal Reserve’s two-day meeting. While the central bank is widely anticipated to maintain its current interest rates, market participants are keenly awaiting any indications regarding future rate decisions. Speculation abounds regarding a potential rate cut in September, although concerns linger over the possibility of a more hawkish stance from the Fed, given persistent inflationary pressures and robust labor market conditions.
In addition to the Fed’s decision, investors are also awaiting the release of CPI data for insights into inflationary trends. Anticipated to reflect persistent inflationary pressures in May, such data could bolster the case for the Fed to maintain higher interest rates for an extended period. Elevated interest rates typically weigh on precious metal markets, increasing the opportunity cost of holding non-yielding assets like gold.
Meanwhile, other precious metals experienced slight gains on Wednesday. Platinum futures rose by 0.2% to $961.95 per ounce, while silver futures climbed by 0.8% to $29.470 per ounce.
In the realm of industrial metals, copper prices recorded an uptick, buoyed by positive signals from China, the world’s largest importer. Benchmark copper futures on the London Metal Exchange rose by 1.1% to $9,863.0 per tonne, while one-month copper futures increased by 0.2% to $4.5255 per pound.
Chinese factory inflation data, as indicated by the Producer Price Index (PPI), exceeded expectations for May, suggesting an improvement in factory activity. However, Chinese CPI data fell short of expectations, underscoring ongoing weakness in consumer spending despite signs of recovery in industrial sectors.
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