Feb 21 2024: In Asian trading on Wednesday, gold prices continued their upward trend, buoyed by a weakening dollar ahead of anticipated signals on U.S. interest rates, notably from the Federal Reserve’s late-January meeting minutes.
Despite this positive momentum, gold remained within a trading range of $2,000 to $2,050 an ounce established over the past month, as market sentiment remained uncertain due to expectations of prolonged higher U.S. interest rates.
Spot gold edged up by 0.3% to $2,029.89 an ounce, while gold futures expiring in April inched up by 0.1% to $2,040.75 an ounce by 00:21 ET (05:21 GMT).
Investor attention was focused on insights from the minutes of the Fed’s late-January meeting, particularly for clues regarding the future trajectory of U.S. interest rates. While the Fed maintained rates during the meeting, it downplayed expectations of imminent rate cuts.
Following better-than-expected U.S. inflation data, prospects of early rate cuts diminished, dampening gold prices temporarily. Despite a brief dip below $2,000 an ounce earlier in February, gold rebounded strongly from two-month lows.
Additionally, market participants awaited speeches from various Fed officials this week, including Raphael Bostic and Michelle Bowman, both members of the bank’s rate-setting committee.
Higher U.S. interest rates typically unfavorably impact gold due to increased opportunity costs associated with investing in the precious metal. However, with expectations of eventual rate reductions in 2024, Goldman Sachs analysts predicted strong gains for gold and other metals.
On Wednesday, other precious metals also saw price increases, with platinum futures rising by 0.3% to $913.10 an ounce and silver futures increasing by 0.2% to $23.192 an ounce. Both metals had been experiencing losses thus far in 2024.
Turning to industrial metals, copper prices climbed on Wednesday, extending recent gains and reaching a three-week high in response to multiple stimulus measures from China, its largest importer.
March copper futures saw a 0.4% rise to $3.8712 a pound. China’s central bank implemented a larger-than-expected interest rate cut on Tuesday, accompanied by supportive measures targeting the struggling property market, aiming to bolster economic growth.
Furthermore, official data indicated significant growth in consumer spending and travel demand during the Lunar New Year holiday, fostering optimism for a consumption recovery in China, a vital component of the economy.
