Feb 26 2024: Gold prices remained within a narrow range during Asian trading on Tuesday, as investors awaited forthcoming economic data to provide direction, while the immediate outlook for the precious metal remained constrained.
The price of gold has largely traded between $2,000 and $2,050 per ounce over the past two months, with potential upward movement being hindered by expectations of sustained higher U.S. interest rates.
Comments from Federal Reserve officials have reinforced this expectation, indicating a reluctance to adjust the central bank’s policy stance despite persistent inflationary pressures. Consequently, the dollar has maintained near three-month highs in response to these signals.
Spot gold edged up by 0.1% to $2,033.36 per ounce, while April gold futures rose by 0.2% to $2,042.60 per ounce by 00:25 ET (05:25 GMT).
Gold investors are eagerly awaiting key U.S. economic data to guide their next moves in the market. The upcoming release of the Personal Consumption Expenditures (PCE) price index on Thursday is anticipated to reflect ongoing inflationary pressures, potentially dissuading the Fed from considering interest rate cuts.
Additionally, a second reading on fourth-quarter GDP data is expected to reveal modest cooling in the U.S. economy, though not to a degree that would prompt the Fed to ease its monetary policy.
Expectations of prolonged higher interest rates pose a challenge for non-yielding assets like gold, as they elevate the opportunity cost of holding the precious metal. Similarly, other precious metals, including platinum and silver, also remained rangebound due to this sentiment.
Platinum futures edged up by 0.5% to $887.85 per ounce, while silver futures saw a slight increase of 0.1% to $22.758 per ounce, with both metals recovering from significant losses witnessed in February.
In the realm of industrial metals, copper futures expiring in March climbed by 0.4% to $3.8510 per pound, with market attention focused on crucial Purchasing Managers’ Index (PMI) data from leading importer China, expected later in the week.
Despite the near-term caution, analysts at UBS anticipate a strengthening of gold later in the year, particularly as U.S. interest rates eventually retreat.
UBS analysts reaffirmed their year-end gold price forecasts at $2,250 per ounce for the conclusion of 2024, and at $2,050 per ounce by June 2024, underscoring gold’s appeal as a standalone investment and a hedge against potential risk events.