Gold prices held steady during Asian trading on Friday, as investors exercised caution ahead of crucial U.S. inflation data that could influence interest rate expectations.
Meanwhile, copper prices dipped in line with disappointing purchasing managers index (PMI) data from China, the leading importer of the metal.
Friday saw some relief in metal markets as the dollar retreated from its two-week peak in overnight trading, following weak gross domestic product (GDP) figures. However, this relief was tempered by ongoing concerns about persistent inflation and the prospect of higher interest rates, ahead of key inflation data.
Spot gold remained unchanged at $2,342.86 per ounce, while gold futures for August delivery slipped 0.1% to $2,363.80 per ounce as of 00:19 ET (04:19 GMT). Despite this minor setback, gold was poised to register a gain of approximately 2.6% for the month of May, after reaching record highs earlier in the month.
However, gold was trading around $100 below its May peak, as investors engaged in profit-taking amid apprehensions about prolonged high interest rates in the United States. Several Federal Reserve officials had cautioned in recent weeks that the central bank was hesitant to start scaling back interest rates in the face of stubbornly high inflation.
All eyes were now on the Personal Consumption Expenditures (PCE) price index data, scheduled for release later on Friday. This data, which is the Fed’s preferred measure of inflation, was expected to show a slight cooling in inflation for April but still remained well above the Fed’s target range of 2% annually.
The prospect of prolonged high interest rates was seen as unfavorable for gold and other precious metals, as it increases the opportunity cost of holding such assets.
In contrast, platinum and silver, both of which have industrial applications, witnessed robust gains in May. Platinum futures fell 0.6% to $1,028.95 per ounce, while silver futures declined 1.6% to $31.030 per ounce on Friday. Nevertheless, both metals posted impressive gains of 9% and 17%, respectively, for the month, benefiting from the speculative fervor that drove up prices of industrial metals.
Meanwhile, benchmark copper futures on the London Metal Exchange stabilized at $10,141.0 per tonne, while one-month copper futures dropped 0.5% to $4.6350 per pound. Despite reaching record highs earlier in May, both contracts relinquished a significant portion of their gains as speculative activity waned, giving way to substantial profit-taking.
Sentiment towards copper was further dampened by weaker-than-expected PMI data from China, where the manufacturing sector unexpectedly contracted in May, while non-manufacturing activity witnessed slower growth.
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