Gold prices experienced a minor decline in the Asian trading session on Friday, influenced by easing recession concerns that tempered the demand for safe-haven assets. Despite this, the yellow metal remained close to record highs due to persistent expectations of impending interest rate cuts, marking a week of modest gains. Spot gold retreated by 0.1% to $2,453.02 per ounce, while gold futures for December delivery saw a similar 0.1% dip to $2,490.15 per ounce as of 01:08 ET (05:08 GMT).
The week saw gold on a trajectory for gains, with spot prices up by 0.9% and hovering around $30 below an all-time high. Soft inflation data earlier in the week bolstered the likelihood of a September interest rate cut by the Federal Reserve, although traders now lean towards a 25 basis point cut rather than a larger 50 bps decrease.
While better-than-expected retail sales figures provided a boost to confidence in the US economy and tempered expectations for a significant rate cut, the overall outlook for lower interest rates remains favorable for gold. This scenario reduces the opportunity cost of investing in non-yielding assets, thereby supporting gold prices.
Furthermore, persistent concerns over a potential conflict in the Middle East, particularly involving Iran and Israel, have maintained some safe-haven demand for gold. Analysts at Alpine Macro have even recommended purchasing gold in light of escalating tensions in the region, especially amid Iran’s anticipated retaliation against Israel following the recent assassination of a Hamas leader in Tehran.
In the precious metals domain, other prices experienced declines on Friday but retained some gains for the week. Platinum futures dropped by 0.5% to $957.85 per ounce, while silver futures decreased by 0.7% to $28.207 per ounce.
Turning to industrial metals, copper prices edged lower on Friday but were set to secure their first weekly gain in six weeks, driven by a strike at Escondida, the world’s largest copper mine in Chile. Benchmark copper futures on the London Metal Exchange fell by 0.2% to $9,128.0 a ton, while one-month copper futures declined by 0.1% to $4.1368 a pound. Both contracts displayed approximately 3% gains for the week, breaking a five-week downtrend.
The strike at Escondida, responsible for 5% of global copper supplies, poses a risk of disrupting production significantly, tightening the supply outlook and supporting copper prices. However, concerns persist regarding subdued copper demand, especially following lackluster economic indicators from China, the primary importer of copper.
