Gold prices saw modest gains in Asian trading on Wednesday, buoyed by remarks from Federal Reserve Chair Jerome Powell that heightened speculation about the timing of potential interest rate cuts.
In contrast, copper prices faced downward pressure, reversing much of their recent recovery due to mixed inflation signals from China, a leading copper importer.
The price of spot gold rose 0.2% to reach $2,367.73 per ounce, while gold futures expiring in August increased by 0.3% to $2,373.90 per ounce as of 00:20 ET (04:20 GMT).
Gold’s recent upward momentum paused following Powell’s testimony, where he acknowledged some cooling in the labor market and progress in inflation management, but refrained from providing clear signals on rate cuts. Powell reiterated the Federal Reserve’s commitment to its 2% inflation target without specifying the timing of rate adjustments.
Market sentiment regarding a potential rate cut in September remained largely intact among traders, although Powell’s cautious remarks ahead of Thursday’s consumer price index (CPI) data introduced some uncertainty. The upcoming CPI figures are expected to show a slight decrease in inflation for June.
The U.S. dollar gained strength following Powell’s testimony, with further insights anticipated from his subsequent appearance before the House later in the day.
Gold’s outlook continues to hinge on the trajectory of interest rates this year, particularly following a period of pressure on precious metals due to higher rates in recent years.
In parallel markets, other precious metals experienced declines on Wednesday. Platinum futures fell by 0.3% to $997.05 per ounce, while silver futures dipped by 0.1% to $31.025 per ounce.
Meanwhile, copper prices faced challenges on the London Metal Exchange, with benchmark futures declining by 0.3% to $9,844.50 per tonne and one-month futures sinking by 0.4% to $4.5652 per pound. Mixed inflation data from China contributed to subdued sentiment towards the industrial metal, as CPI shrank in June amid ongoing economic uncertainties.
Despite a slower decline in producer price index inflation, China continues to grapple with deflationary pressures, impacting market perceptions of copper’s future performance.
The dynamics of global economic indicators and central bank policies will likely continue to influence the direction of precious and industrial metal markets in the near term.
