In Asian trading on Tuesday, gold prices experienced a slight decline amid cautious sentiment surrounding upcoming signals on U.S. inflation and the Federal Reserve’s monetary policy stance. This hesitancy among investors deterred significant trades, compounded by the recent strength observed in the dollar.
Meanwhile, copper prices witnessed notable declines since Monday, driven by profit-taking following a surge to 11-month highs last week. Additionally, concerns over weakening sentiment towards China, a major importer of industrial metals, exerted downward pressure on copper prices.
Gold, which had reached record highs last week, retreated as dovish signals from major central banks prompted a widespread shift towards the dollar, leading to a surge in the dollar index to a one-month peak. Although the dollar experienced some profit-taking this week, it remained relatively robust.
Spot gold stabilized at $2,171.90 per ounce, while gold futures expiring in April dipped by 0.2% to $2,172.45 per ounce by 00:25 ET (04:25 GMT). Despite the slight retreat, gold prices remained within the spotlight as investors awaited further cues on inflation and central bank policies.
Gold prices muted with PCE inflation, Fed comments on tap
Gold remained largely unchanged as investors awaited the release of the Personal Consumption Expenditures (PCE) price index data, which is scheduled for this Friday. The PCE price index is considered the Federal Reserve’s preferred gauge of inflation and is anticipated to influence the central bank’s outlook on interest rates.
In the short term, gold is anticipated to encounter some resistance, particularly if the inflation data suggests persistent price pressures that could potentially delay the Fed’s plans to lower interest rates later this year. The Fed had signaled last week its intention to reduce rates by 75 basis points in 2024, contingent upon inflation dynamics.
Market participants are also closely monitoring remarks from key Federal Reserve officials, including Chair Jerome Powell and FOMC member Mary Daly, scheduled for later this week. Any indications of a prolonged period of elevated interest rates are likely to exert downward pressure on metal markets.
Meanwhile, other precious metals experienced declines on Tuesday. Platinum futures dipped by 0.2% to $914.60 per ounce, while silver futures slipped by 0.4% to $24.802 per ounce.
Copper prices slide from 11-mth highs as China sentiment sours
Three-month copper futures on the London Metal Exchange experienced a modest decline of 0.3%, settling at $8,839.00 per ton, while one-month U.S. copper futures saw a 0.4% drop to $3.9947 per pound.
These declines come after both contracts retreated from their recent highs, which were reached last week. The pullback followed the release of Chinese inventory data, indicating ample copper stockpiles in the world’s largest importer. This data acted as a counterbalance to positive signals from leading Chinese copper refiners, who expressed intentions to reduce production levels, thereby tightening global copper supplies.
Moreover, broader sentiment towards China soured as investors grew increasingly impatient with the lack of additional stimulus measures from Beijing. The sluggish performance of the Chinese economy exacerbated concerns, as it showed minimal signs of improvement.