Feb 16 2024: Gold prices showed little movement in Asian trading on Friday, steadying above the $2,000 mark following weak U.S. retail sales data that raised concerns about the Federal Reserve’s interest rate strategy.
On Thursday, gold managed to reclaim the $2,000 per ounce level after earlier declines in the week, partially buoyed by safe-haven demand amid reports of recessions in Japan and the UK.
However, despite this rebound, gold remained on track for significant weekly losses as traders revised down expectations for imminent rate cuts, especially in light of higher-than-expected consumer price index data earlier in the week.
Spot gold held firm at $2,003.86 per ounce, while April gold futures stabilized at $2,015.55 per ounce. Both were set to register a 1.1% decline for the week, marking their weakest performance since early December.
Federal Reserve officials, including Atlanta Fed President Raphael Bostic, cautioned against premature speculation on rate cuts, emphasizing ongoing efforts to address inflation. Bostic highlighted the expectation for a prolonged period before inflation eases. Meanwhile, San Francisco Fed President Mary Daly is scheduled to speak later in the day.
The prevailing sentiment of a resilient U.S. economy, coupled with robust labor market conditions, suggests a less favorable environment for gold prices, as higher interest rates increase the opportunity cost of holding the precious metal.
In contrast, other precious metals showed mixed movements on Friday but were poised for stronger weekly performances compared to gold, indicating potential diversification away from the yellow metal. Silver futures for March delivery inched up by 0.3%, on track for a 1.9% weekly gain, while April platinum futures slipped by 0.4%, but were set to record a 2.7% weekly increase.
Industrial metal copper saw an uptick on Friday, extending gains from the previous session as a weaker dollar supported prices. April copper futures rose by 0.4% to $3.7728 per pound, heading towards a 2.5% weekly rise. However, concerns about global economic challenges continued to weigh on copper, despite the short-term relief from dollar weakness.