In Asian trading on Tuesday, gold prices saw a slight increase, bouncing back modestly from recent steep declines. The market’s attention remains squarely fixed on forthcoming U.S. inflation figures, which are expected to provide crucial insights into future interest rate movements.
Spot gold rose by 0.3% to reach $2,343.60 per ounce, while gold futures expiring in June also climbed by 0.3% to $2,349.05 per ounce by 00:22 ET (04:22 GMT).
Investors have noted that, although gold demonstrated some strength last week, it continues to trade well below its peak levels achieved in April. The predominant sentiment among traders still leans towards the dollar, fueled by concerns over the likelihood of sustained higher interest rates in the U.S.
The upcoming release of U.S. economic data is eagerly anticipated by market participants. The producer price index (PPI) is scheduled for release later on Tuesday, followed by the more influential consumer price index (CPI) reading on Wednesday. These metrics are expected to influence expectations regarding future U.S. interest rate adjustments, particularly after robust inflation readings in the first quarter led to a reevaluation of interest rate forecasts for the remainder of the year.
While the prevailing market sentiment presents additional challenges for gold, the yellow metal has benefited from increased demand for safe-haven assets amidst heightened geopolitical tensions in the Middle East. However, signs of de-escalation in certain geopolitical situations, particularly between Iran and Israel, have left gold susceptible to pressures stemming from interest rate dynamics.
Elevated interest rates are generally unfavorable for gold, as they elevate the opportunity cost of holding the precious metal, which yields no interest.
In tandem with gold, other precious metals also saw gains on Tuesday. Platinum futures rose by 0.1% to $1,011.05 per ounce, while silver futures surged by 0.9% to $28.688 per ounce.
The positive sentiment extended to industrial metals as well, notably copper, which reached two-month highs. Optimism in copper markets was fueled by signals from China regarding a substantial bond issuance aimed at bolstering infrastructure spending and supporting economic recovery efforts. Three-month copper futures on the London Metal Exchange climbed by 0.2% to $10,227.0 per ton, with one-month copper futures rising by 0.5% to $4.7940 per pound—both reaching their highest levels since April 2022.
News of the Chinese bond issuance offset concerns surrounding China’s property market, which experienced another major developer defaulting on bond payments.
