Gold prices inched marginally higher during Asian trading on Friday, facing pressure from a rebounding dollar that tempered optimism surrounding reduced U.S. interest rate cuts despite signs of easing inflation.
Spot gold edged up by 0.1% to $2,305.23 per ounce, while August gold futures also gained 0.1% to $2,320.15 per ounce as of 00:56 ET (04:56 GMT).
The precious metal, which had seen gains earlier in the week, continued to recover from recent steep declines following its peak prices, influenced by elevated interest rates.
The Federal Reserve’s revised forecast of a single interest rate cut in 2024, down from previous expectations of three cuts, weighed on gold and broader metal prices in recent sessions. Although softer-than-expected consumer price index data initially weakened the dollar and bolstered gold, market sentiment pivoted back towards the greenback following the Fed’s announcement.
Despite the release of subdued producer price index data, the dollar rebounded, alongside recovering Treasury yields that had dipped earlier in the week.
The prospect of prolonged high interest rates poses challenges for gold and other metals as they increase the opportunity cost of holding non-yielding assets. Consequently, other precious metals traded within narrow ranges on Friday, with platinum futures rising modestly by 0.3% to $957.80 per ounce, while silver futures fell marginally by 0.2% to $28.992 per ounce, both reflecting muted weekly performances.
Meanwhile, copper prices showed marginal gains on Friday amidst a lackluster performance for the week, influenced by a stronger dollar. Benchmark copper futures on the London Metal Exchange rose by 0.3% to $9,824.0 per tonne, while one-month copper futures increased by 0.2% to $4.4945 per pound.
Sentiment towards copper was impacted by recent developments as the European Union joined the U.S. in imposing tariffs on Chinese electric vehicle imports, potentially hindering demand in this key sector and impacting copper consumption, given its integral role in EV production.
Furthermore, escalating trade tensions between major economies raised concerns about a resurgence of global trade disputes, adding additional pressure on industrial metals.
Overall, the complex interplay of economic data and geopolitical developments continues to influence the trajectory of both precious and industrial metals in global markets.
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