In the realm of Asian trade on Wednesday, gold prices adhered closely to a narrow range. The trajectory of the precious metal’s decline was curbed by a weakening dollar, yet the market remained cautious in anticipation of further signals regarding interest rates.
Following a significant retreat from recent peak levels, bullion prices found themselves under pressure due to diminished safe-haven demand catalyzed by easing tensions surrounding the Iran-Israel conflict.
As of 00:04 ET (04:04 GMT), spot gold demonstrated a modest uptick of 0.3%, reaching $2,330.05 per ounce, while gold futures for June delivery stabilized at $2,343.15 per ounce. This marked a departure from the record high attained earlier in April, with current spot prices lingering approximately $100 below that pinnacle.
The Dollar’s Weakening Influence on Gold
The dollar exhibited a decline in overnight trading sessions, influenced in part by softer-than-anticipated purchasing managers index data for April. This depreciation in the greenback contributed to mitigating the recent downturn in gold prices, given the typical inverse relationship between the dollar and most metal valuations.
However, despite this alleviation, the dollar maintained a substantial portion of its April gains, as market sentiments gradually discounted the likelihood of imminent interest rate adjustments by the Federal Reserve.
While the initial surge in safe-haven demand propelled gold beyond these impediments, the absence of further escalations in the Middle East has rendered bullion susceptible to concerns regarding prolonged periods of elevated interest rates. Such conditions unfavorably affect gold by augmenting the opportunity cost associated with investing in the precious metal.
Rise of Other Precious Metals Amid Dollar Weakness
Against the backdrop of a weakening dollar, other precious metals experienced upward momentum in Asian trading. Nevertheless, these metals continued to convalesce from recent substantial losses. Platinum futures climbed by 0.4% to $924.50 per ounce, while silver futures saw a 0.5% increase to $27.485 per ounce.
Anticipation Surrounding Economic Indicators
Market attention has now shifted decisively towards imminent U.S. economic indicators, expected to furnish further insights into interest rate dynamics. First-quarter gross domestic product data is slated for release on Thursday, followed by the PCE price index data—a metric favored by the Federal Reserve to gauge inflation—scheduled for Friday.
Recent indicators indicating persistent U.S. inflationary pressures have led to a recalibration of market expectations, with a diminished likelihood of a rate cut in June.
Copper’s Ascent Despite Lingering Challenges
In the realm of industrial metals, copper prices exhibited upward movement on Wednesday, buoyed by the weakening dollar. However, despite this ascent, copper valuations remained below recent two-year highs. This is attributed in part to Chile, a leading copper producer, signaling its intention to ramp up output throughout the year.
Furthermore, the outlook for copper demand was dampened by lackluster U.S. PMI data, which revealed an unexpected contraction in manufacturing activity.
On the London Metal Exchange, three-month copper futures registered a 0.8% increase, reaching $9,817.50 per ton, while one-month copper futures saw a 1.1% rise to $4.4710 per pound.