Gold prices remained stable during Asian trading on Wednesday, lingering near a key support level as traders awaited clearer signals on U.S. interest rates from the Federal Reserve meeting and upcoming inflation data.
The precious metal has recently experienced a sharp decline, driven by traders adjusting their expectations away from U.S. rate cuts due to persistent inflation and a strong labor market. This adjustment has boosted the dollar to one-month highs, putting pressure on metal prices and driving up Treasury yields.
In early trading, spot gold edged down 0.1% to $2,313.76 an ounce, while gold futures for August delivery rose 0.2% to $2,330.10 an ounce by 00:46 ET (04:46 GMT).
Gold Holds Around $2,300 Support, Awaits Fed and CPI Data
Spot gold prices found support at approximately $2,300 an ounce amidst the recent decline, with the possibility of future rate cuts by the Federal Reserve helping to limit further losses.
The Federal Reserve is concluding a two-day meeting later on Wednesday and is widely anticipated to keep interest rates unchanged. However, market participants are keenly watching for any indications regarding future rate decisions, especially amid speculation about a potential rate cut in September. Despite this, traders are also cautious about a possible hawkish stance from the Fed, given the persistent inflation and robust labor market.
Prior to the Fed’s announcement, the consumer price index (CPI) data, also due on Wednesday, is expected to indicate that inflation remained high in May. Persistent inflation could motivate the Fed to maintain higher rates for an extended period, which typically negatively impacts precious metal markets by increasing the opportunity cost of holding non-yielding assets.
Other Precious Metals See Modest Gains
On Wednesday, other precious metals saw slight increases. Platinum futures rose 0.2% to $961.95 an ounce, while silver futures climbed 0.8% to $29.47 an ounce.
Copper Prices Lifted by Positive Chinese Factory Data
Among industrial metals, copper prices advanced on Wednesday, recovering some recent losses, buoyed by positive signals from top importer China.
Benchmark copper futures on the London Metal Exchange rose 1.1% to $9,863.00 a tonne, while one-month copper futures increased 0.2% to $4.5255 a pound.
Data from China showed that producer price index (PPI) inflation declined slightly less than expected in May, with PPI shrinking at its slowest pace in 15 months, suggesting an improvement in factory activity. However, Chinese consumer price index (CPI) data for May came in weaker than expected, indicating ongoing weakness in consumer spending.
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