Gold prices have retraced from their recent two-month highs, with market participants closely monitoring Federal Reserve Chair Jerome Powell’s upcoming speech and responding to a resurgence in the U.S. dollar. On Thursday, spot gold dipped by 0.1%, settling at $1,946.51 per ounce, while gold futures experienced a 0.5% decline, closing at $1,958.35 per ounce.
The recent uptick in gold prices was primarily attributed to the escalating conflict between Israel and Hamas, which heightened gold’s appeal as a safe-haven asset. However, this ascent was moderated by the concurrent surge in U.S. Treasury yields and the dollar’s rebound, both spurred by expectations of impending interest rate hikes.
Market sentiment reflects the anticipation of elevated interest rates, a sentiment mirrored by the surging Treasury yields and an unexpected spike in U.S. inflation data. The financial community is looking to Powell’s forthcoming speech to confirm his commitment to sustaining elevated interest rates over an extended timeframe.
The cancellation of a diplomatic summit that was set to involve leaders from the United States, Egypt, and Palestine has further agitated the markets, maintaining gold’s proximity to its recent peak, as investors continue to closely monitor developments in the Middle East conflict.
In other segments of the commodities market, copper prices saw a decline, prompted by concerns over a potential real estate market downturn in China, despite positive Chinese GDP data. Copper futures experienced a 0.3% drop, closing at $3.5713 per pound. This decline was influenced by the default of a critical offshore bond repayment deadline by Country Garden, a major Chinese developer, signaling potential widespread defaults on its foreign debt obligations.
