Mar 4 2024: Gold prices experienced a slight decline in Asian trading on Monday but remained close to two-month highs, bolstered by increasing speculation of potential interest rate cuts in the United States later this year, prompting significant gains in the precious metal.
However, gold is expected to consolidate its position in the short term, particularly with key signals from the Federal Reserve and significant labor market data scheduled for later in the week.
Spot gold edged down by 0.1% to $2,080.86 per ounce, while gold futures expiring in April dipped by 0.3% to $2,089.25 per ounce as of 00:12 ET (05:12 GMT). Both instruments saw robust rallies of over 2% each over the past week, reaching their highest levels for 2024 and breaking free from a trading range established earlier in the year.
Gold’s recent gains were propelled by soft economic data from the United States, which led to speculation that the Federal Reserve could implement interest rate cuts by June. However, with the anticipation of further indications from the central bank, traders exercised caution, refraining from making significant bets on the precious metal.
In tandem with gold, other precious metals also experienced a retreat on Monday. Platinum futures dropped by 0.4% to $888.70 per ounce, while silver futures declined by 0.5% to $23.240 per ounce.
The upcoming focus for markets is centered on a two-day testimony by Federal Reserve Chair Jerome Powell later in the week, with investors eager for insights into the future trajectory of interest rates. Analysts anticipate Powell to maintain a cautious stance, emphasizing the need for more evidence that inflation is converging towards the Fed’s 2% annual target, although expectations of a hawkish tilt persist.
Beyond Powell’s testimony, attention will shift to the release of key nonfarm payrolls data for February, scheduled for Friday. The labor market’s performance remains a critical factor influencing the Fed’s decisions regarding interest rates.
In the realm of industrial metals, copper futures expiring in May witnessed a 0.4% decline to $3.8443 per pound, with market sentiment turning cautious ahead of significant developments in China, the world’s largest copper importer. China’s upcoming National People’s Congress is anticipated to unveil additional stimulus measures and economic forecasts for 2024, potentially impacting copper prices.
However, analysts from ANZ highlight the potential offsetting effect of surging growth in India, which could counterbalance any slowdown in demand from China. Recent data indicating India’s sustained economic expansion and infrastructure spending suggest a positive outlook for copper demand in the country.