Gold prices remained stable during Asian trading on Friday, influenced by a strengthening dollar as expectations of fewer U.S. interest rate cuts tempered optimism about easing inflation.
Despite some weekly gains, gold faced significant pressure, retreating from record highs due to persistent high interest rates.
As of 00:56 ET (04:56 GMT), spot gold inched up 0.1% to $2,305.23 per ounce, while gold futures for August delivery also rose 0.1% to $2,320.15 per ounce.
High Rates Weigh on Gold
Gold and other metal prices have declined in recent sessions following the Federal Reserve’s indication that it anticipates only one interest rate cut in 2024, a reduction from earlier projections of three cuts.
Although gold saw some gains earlier in the week after softer-than-expected consumer price index data weakened the dollar, traders ultimately returned to the dollar in response to the Fed’s forecast.
The rebound of the dollar was undeterred by softer-than-expected producer price index data, and Treasury yields recovered from lows reached earlier in the week.
Sustained high interest rates negatively impact gold and other metals, as they increase the opportunity cost of holding non-yielding assets. This outlook kept other precious metals trading within narrow ranges on Friday. Platinum futures rose 0.3% to $957.80 per ounce, while silver futures fell 0.2% to $28.992 per ounce. Both metals are also on track for subdued weekly performances.
Copper Prices Set for Uneventful Week Amid China’s Economic Concerns
In the industrial metals market, copper prices saw a slight increase on Friday but remained poised for a lackluster weekly performance, pressured by the stronger dollar.
Benchmark copper futures on the London Metal Exchange climbed 0.3% to $9,824.0 per tonne, while one-month copper futures edged up 0.2% to $4.4945 per pound.
Market sentiment towards China deteriorated after the European Union joined the U.S. in imposing tariffs on Chinese electric vehicle imports. These tariffs pose challenges for the rapidly growing EV industry and could dampen copper demand, as EVs are significant consumers of the metal.
Furthermore, escalating trade tensions between the world’s largest economies have sparked fears of a renewed trade war, adding to the uncertainty in the copper market.
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