Tuesday’s modest decline in gold prices in Asian trade was caused by large deals being retracted due to the recent strengthening of the dollar and expectations of important signals from the Federal Reserve and U.S. inflation.
Since Monday, the price of copper has dropped sharply among industrial metals as traders booked profits from a spike to 11-month highs last week. Diminished perceptions of China, the leading importer, also had an impact.
Following dovish signals from major central banks, which caused traders to rush into the dollar and drive the dollar index to a one-month high, gold fell from record highs last week. Even though there was some profit-taking in the greenback this week, it was still holding steady.
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While gold futures expiring in April dropped 0.2% to $2,172.45 an ounce by 00:25 ET (04:25 GMT), spot gold remained stable at $2,171.90 an ounce.
PCE inflation subdued gold prices, and the Fed will speak soon.
In light of the Fed’s favored inflation indicator, the PCE price index data, which is coming this Friday, gold is treading water. It is generally anticipated that the reading will influence the Fed’s interest rate outlook.
Short-term resistance to gold is anticipated, particularly if sticky inflation data indicate that the Fed may postpone its rate-cutting strategy this year. Last week, the central bank hinted that it will cut interest rates by 75 basis points in 2024, though this was still conditioned on inflation.
Later this week, statements from prominent Fed members Mary Daly and Jerome Powell, the chair of the FOMC, are also anticipated.
Metal markets are likely to be affected by any indications of increased interest rates for longer periods of time.
On Tuesday, other precious metals saw a decline. Silver prices dropped 0.4% to $24.802 an ounce, and platinum futures declined 0.2% to $914.60 an ounce.
Copper prices decline from 11-month highs as confidence in China declines
One-month U.S. copper prices dropped 0.4% to $3.9947 a pound, while three-month copper futures on the London Metal Exchange declined 0.3% to $8,839.00 a ton.
Since China is the world’s largest importer of copper, its inventories remain plenty, according to recent inventory data. As a result, both contracts were trading significantly below their 11-month highs set last week.
Leading Chinese copper refiners sent out encouraging signs that they planned to reduce output and tighten global supply, but the statistics generally countered such signals.
As Beijing’s stimulus policies continued to deteriorate and the Chinese economy showed no signs of recovery, investor resentment of the government also grew.