Apr 29 2024: Gold prices remained relatively unchanged in Asian trading on Monday, showing little recovery from recent declines as investors continued to factor in expectations of higher U.S. interest rates ahead of the Federal Reserve meeting later this week.
The precious metal had dropped from its record highs reached earlier in April, influenced by reduced safe-haven demand amidst no escalation in tensions between Iran and Israel. This lack of geopolitical tension left gold susceptible to outflows amid the backdrop of a tightening U.S. monetary policy.
Spot gold held steady at $2,334.66 per ounce, while gold futures expiring in June remained flat around $2,345.60 per ounce by 01:10 ET (05:10 GMT).
Fed Meeting Focus After PCE Data Release
The strength of the U.S. dollar also weighed on gold prices, particularly following a higher-than-expected reading on the PCE price index, which is closely watched by the Federal Reserve as an inflation gauge.
The market largely adjusted expectations for early rate cuts by the Fed due to signs of persistent U.S. inflation. The consensus now leans towards the Fed starting to trim rates in September or later in the fourth quarter, making the upcoming Fed meeting crucial for insights into the central bank’s rate plans.
Gold’s outlook is influenced by the expectation of higher interest rates, as they increase the cost of holding non-yielding assets like gold. Despite recent declines, gold prices were still positive for the year, driven by ongoing concerns that elevated interest rates could dampen global economic growth.
Other Precious Metals and Copper Prices
In contrast to gold, other precious metals showed mild positivity after significant losses in previous weeks. Platinum futures rose 0.6% to $930.05 per ounce, while silver futures gained 0.3% to $27.613 per ounce.
Meanwhile, copper prices surged to two-year highs on Monday due to optimism about robust Chinese demand. Beijing’s easing of restrictions on house purchases in major cities to support the property market boosted hopes for strong copper demand in China, the world’s largest copper importer.
Three-month copper futures on the London Metal Exchange climbed 0.4% to $10,015.0 per ton, marking their highest level since May 2022. One-month copper futures rose 0.2% to $4.5962 per pound. The focus now shifts to key Chinese purchasing managers index data expected later this week for further insights into copper demand trends.
