Gold prices experienced a modest uptick in Asian trading on Friday, buoyed by indications of a cooling U.S. economy, which prompted some demand for the precious metal. However, gains remained subdued as investors awaited further cues on potential rate cuts from crucial inflation data.
Despite the positive movement, the yellow metal was poised for significant weekly losses following a sharp decline from near-record highs witnessed over the past five sessions. Traders largely recalibrated their expectations for early U.S. interest rate cuts, contributing to the downward pressure on gold prices.
In the early hours of trading, spot gold edged up by 0.2% to $2,335.86 per ounce, while gold futures expiring in June also recorded a 0.2% increase to $2,335.68 per ounce by 01:00 ET (05:00 GMT).
The dollar’s retreat in response to softer-than-anticipated gross domestic product (GDP) data provided some relief for bullion prices. However, this relief was tempered by a stronger GDP price index, prompting traders to further adjust their expectations regarding potential interest rate cuts by the Federal Reserve.
Spot prices were on track to register a 2% decline for the week, extending losses from record highs reached earlier in April, when prices soared to around $2,430 per ounce.
One of the primary factors contributing to the downward pressure on gold was the diminishing risk premium associated with unrest in the Middle East, particularly as fears of an Iran-Israel conflict failed to materialize. Moreover, waning expectations of Fed rate cuts, as indicated by the CME Fedwatch tool, weighed heavily on gold’s performance.
With upcoming Personal Consumption Expenditures (PCE) price index data looming, market attention is squarely focused on this key inflation gauge, which is expected to influence the Fed’s monetary policy outlook.
The prospect of prolonged higher interest rates poses challenges for gold, as it elevates the opportunity cost of holding the precious metal.
Meanwhile, other precious metals recorded gains on Friday but were still recuperating from steep losses incurred throughout the week. Platinum futures rose by 0.6% to $931.25 per ounce, while silver futures increased by 0.9% to $27.60 per ounce.
In the realm of industrial metals, copper prices surged to two-year highs, benefiting from a weakened dollar. Three-month copper futures on the London Metal Exchange climbed by 0.8% to $9,983.50 per ton, while one-month copper futures rose by 0.7% to $4.5745 per pound.
Attention turned to a significant development in the copper market, with top miner BHP Group Ltd’s bid for smaller copper miner Anglo American PLC potentially reshaping the industry landscape. However, reports suggested that Anglo’s board was largely dismissive of the offer. Additionally, signals of production cuts by Chinese copper refiners and tighter Western sanctions on Russian metal exports underscored expectations of tightening market conditions.
