In the realm of Asian trade on Monday, gold prices exhibited a retreat, marking a consolidation of recent gains, while traders pivoted towards the dollar in anticipation of significant U.S. inflation data slated for later in the week.
The precious metal, often seen as a safe-haven asset, experienced a surge in the previous week, propelled by indications of a cooling U.S. economy, which fueled speculations regarding potential interest rate cuts by the Federal Reserve in 2024.
Despite this uptick, gold remains notably below the peak levels it attained in April, with expectations rife that it will maintain a range-bound trajectory preceding the impending inflation data release this week.
As the clock struck 23:55 ET (03:55 GMT), spot gold witnessed a marginal decline of 0.1%, settling at $2,357.35 per ounce, while gold futures expiring in June recorded a 0.5% dip, resting at $2,363.65 per ounce.
Metal Markets Brace for Inflation Tidal Wave
The ambiance within the gold and broader metal markets is taut with anticipation as pivotal U.S. inflation readings loom large on the horizon this week.
Scheduled for Tuesday, the producer price index data for April is set to make its debut, followed closely by the highly scrutinized consumer price index data, slated for Wednesday.
Should there be any indication of stubborn inflationary pressures, it is anticipated to further erode the prospects of U.S. interest rate cuts in the current year, thereby bolstering the dollar and exerting downward pressure on metal prices.
The recent bout of volatility in the greenback appears to have steadied. Notably, data from Friday unveiled a substantial weakening in U.S. consumer confidence for May, juxtaposed with persistently high inflation projections for the upcoming year.
With the specter of higher interest rates looming, the broader precious metal prices find themselves under duress as investors grapple with the notion of increased opportunity costs associated with metal market investments.
Platinum futures managed to stabilize at $1,005.05 per ounce, while silver futures witnessed a slight decline of 0.8%, settling at $28.288 per ounce.
Copper Inches Up Amidst Uncertain Chinese Indicators
On the industrial metals front, copper prices displayed an upward trajectory on Monday, holding firm near two-year highs amidst burgeoning optimism surrounding tighter market conditions. However, further upward momentum was curbed by conflicting signals emanating from China, the leading importer of copper.
Three-month copper futures on the London Metal Exchange ascended by 0.3%, reaching $10,080.50 per ton, while one-month copper futures experienced a modest uptick of 0.2%, resting at $4.6630 per pound.
Over the weekend, Chinese inflation data painted a nuanced picture, revealing a surge in CPI inflation, while PPI inflation, a crucial barometer of local factory and business activity, continued its downward trajectory for the 19th consecutive month.
However, the mixed bag of inflation readings was partially offset by Beijing’s decision to ease restrictions on the beleaguered property sector, a move anticipated to potentially buoy copper demand in the forthcoming months.