Mar 12 2024: Gold prices experienced a decline in Asian trading on Tuesday, stepping away from their all-time highs as traders opted to secure profits in anticipation of the release of key U.S. inflation data, which is expected to influence interest rate trajectories.
The surge in speculation about interest rate cuts as early as June, alongside heightened demand for safe-haven assets, propelled bullion prices to unprecedented levels in March, with spot prices edging close to breaching the $2,200 per ounce mark.
However, this rally moderated in recent sessions, particularly following somewhat hawkish signals from the Federal Reserve and mixed labor market statistics. The stabilization of the dollar after recent declines also exerted pressure on metal markets.
Spot gold dipped by 0.2% to $2,178.43 per ounce, while gold futures expiring in April retreated by 0.2% to $2,184.65 per ounce by 01:24 ET (05:24 GMT). Both instruments traded approximately $15 below their record highs achieved last week.
Attention has now shifted to the eagerly anticipated U.S. Consumer Price Index (CPI) data scheduled for release later on Tuesday, which is expected to provide further insights into the potential trajectory of interest rates.
Projections suggest that the CPI reading for February will indicate persistent inflation, remaining well above the Federal Reserve’s 2% annual target.
Market observers are closely monitoring the inflation data, particularly after several Fed officials, including Fed Chair Jerome Powell, emphasized that any decisions regarding the timing and extent of rate cuts this year will be closely linked to inflation trends.
The CPI data is also anticipated to offer clearer direction to markets following a series of mixed signals from last week’s nonfarm payrolls data.
Gold is poised to benefit from significant interest rate cuts anticipated later this year—a factor that has been a primary driver behind the recent surge in the precious metal’s value.
Other precious metals also experienced declines on Tuesday after registering notable gains in recent sessions. Platinum futures declined by 0.5% to $938.0 per ounce, while silver futures slipped by 0.1% to $24.685 per ounce.
Copper prices observed a decline on Tuesday, albeit maintaining some gains accumulated over the past week amid expectations of additional stimulus measures in China, the leading importer of the metal.
Copper futures expiring in May decreased by 0.3% to $3.9218 per pound, following a rise of approximately 0.8% last week.
Encouraging import data from China indicated sustained demand within the country despite prevailing economic challenges.