Gold prices retreated from record highs in Asian trade on Tuesday as traders locked in some profits ahead of key U.S. inflation data, expected to influence interest rate decisions.
In March, growing speculation of interest rate cuts, possibly as early as June, alongside heightened safe-haven demand, propelled bullion prices to unprecedented levels. Spot prices approached $2,200 per ounce during this surge.
However, this rally tempered in recent sessions, particularly after the Federal Reserve signaled a somewhat hawkish stance and mixed labor market data emerged. The steadying of the dollar from recent losses also exerted pressure on metal markets.
Spot gold declined by 0.2% to $2,178.43 an ounce, while gold futures expiring in April dropped by 0.2% to $2,184.65 an ounce as of 01:24 ET (05:24 GMT). Both instruments traded approximately $15 below their record highs reached last week.
CPI data awaited for rate cut cues
Attention has now shifted to the eagerly anticipated U.S. Consumer Price Index (CPI) data scheduled for release later on Tuesday, which will provide further insights into the potential trajectory of interest rates.
Analysts anticipate that the reading will reveal that inflation remained persistent in February, remaining well above the Federal Reserve’s 2% annual target. The inflation data assumes significant importance following remarks from several Fed officials, notably Fed Chair Jerome Powell, who emphasized that any decisions regarding the timing and magnitude of rate adjustments this year would hinge closely on inflation trends. Moreover, the inflation figures are expected to provide clearer guidance to markets following the somewhat ambiguous signals from last week’s nonfarm payrolls data.
Gold is poised to benefit from any substantial reductions in interest rates this year, a sentiment that has been a primary driver of the precious metal’s recent rally.
Meanwhile, other precious metals experienced declines on Tuesday after posting robust gains in recent sessions. Platinum futures dipped by 0.5% to $938.0 an ounce, while silver futures edged down by 0.1% to $24.685 an ounce.
Copper sits on some gains amid China hopes
Copper prices experienced a slight decline on Tuesday, although they had managed to maintain some gains over the past week, buoyed by optimism surrounding potential stimulus measures in China, the top importer of the metal.
Copper futures expiring in May dipped by 0.3% to $3.9218 a pound, following a modest increase of about 0.8% during the previous week.
The market received a boost from positive import data from China, indicating that demand for copper remained resilient in the country despite prevailing economic challenges.