Gold prices inched higher during Asian trading on Wednesday, buoyed by speculation surrounding potential interest rate cuts following remarks from Federal Reserve Chair Jerome Powell.
Meanwhile, copper prices retreated, erasing gains made in recent sessions, as conflicting inflation signals emerged from China, the world’s leading copper importer.
The price of gold has shown resilience in recent trading sessions, bolstered by a weakening dollar and growing anticipation of a rate cut in September. However, gains were tempered as the Federal Reserve offered no clear indications regarding the future trajectory of interest rates.
At 00:20 ET (04:20 GMT), spot gold edged up 0.2% to $2,367.73 per ounce, while gold futures expiring in August rose by 0.3% to $2,373.90 per ounce.
The momentum in gold prices slowed following Powell’s testimony and ahead of the release of the Consumer Price Index (CPI) data scheduled for Thursday. Powell highlighted signs of cooling in the labor market and progress in inflation control, without specifying a timeline for rate cuts.
Traders largely maintained their bets on a September rate reduction, although Powell’s cautious remarks added an element of uncertainty ahead of the crucial CPI data, which is expected to show a marginal easing in inflation for June.
The dollar regained some strength following Powell’s statements, with the Fed Chair set to testify before the House later in the day.
The outlook for gold remains closely tied to interest rate movements this year, particularly as elevated rates have historically weighed on precious metals markets over the past couple of years.
In contrast, other precious metals saw declines on Wednesday. Platinum futures slipped by 0.3% to $997.05 per ounce, while silver futures dipped 0.1% to $31.025 per ounce.
Silver has outperformed gold in recent months, supported by its industrial applications which provide a competitive advantage.
Copper Prices Decline Amid Mixed China Inflation Signals
Benchmark copper futures on the London Metal Exchange fell 0.3% to $9,844.50 per tonne, while one-month copper futures dropped 0.4% to $4.5652 per pound.
Market sentiment towards copper was dampened by conflicting inflation data from China, where consumer price inflation contracted in June due to ongoing economic challenges. Although producer price index inflation saw its slowest decline in 16 months, deflationary pressures continued to influence market sentiment.
The mixed signals from China contributed to the decline in copper prices, reversing gains made earlier in the week.
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