Gold Doesn't Benefit From Rate Cut Expectations; Copper Struggles

Gold prices dipped in Asian trading on Monday as investors turned towards riskier assets amid growing expectations of interest rate cuts, while the dollar weakened. The rush into risk-driven assets largely excluded gold from significant gains.

Meanwhile, copper prices declined, tracking mixed data from China’s purchasing managers index. A decline in speculative trading also contributed to the pullback in copper prices.

The decline in gold prices was further exacerbated by reduced safe-haven demand following reports of potential peace talks between Israel and Hamas, potentially easing tensions in the Middle East.

Spot gold dropped by 0.3% to $2,321.51 per ounce, while gold futures expiring in August slipped by 0.2% to $2,341.55 an ounce by 00:31 ET (04:31 GMT).

The decline in gold prices coincided with a surge in Asian stocks as investors reacted to cooling inflation data in the United States. The PCE price index data for April, the Federal Reserve’s preferred inflation gauge, showed an expected easing, prompting speculation of rate cuts by the Fed, particularly in September.

However, the prospect of rate cuts by the European Central Bank and the Bank of Canada, scheduled to hold meetings later in the week, did little to support gold prices.

In other precious metals, platinum futures rose by 0.3% to $1,046.60 an ounce, while silver futures fell by 0.2% to $30.370 an ounce.

Copper prices remained under pressure, with benchmark futures on the London Metal Exchange stabilizing at $10,093.50 a tonne, and one-month copper futures declining by 0.2% to $4.6160 a pound. Speculative trading, which had driven copper prices higher in April and early May, tapered off, leading to the decline.

Mixed economic data from China added to uncertainties in the copper market. While private PMI data for May showed better-than-expected growth in the manufacturing sector, government PMI data from the previous week indicated contraction in the same sector.