Gold prices have retreated from their recent two-month highs as financial markets eagerly await Federal Reserve Chair Jerome Powell’s forthcoming speech and react to a resurgence in the strength of the U.S. dollar. On Thursday, spot gold experienced a marginal decline of 0.1%, reaching $1,946.51 per ounce, while gold futures saw a more substantial drop of 0.5%, resting at $1,958.35 per ounce.
The recent upswing in gold prices had been fueled by the escalating tensions between Israel and Hamas, which had heightened gold’s appeal as a safe-haven asset. However, this surge was counterbalanced by the simultaneous increase in U.S. Treasury yields and the dollar’s resurgence, both of which were driven by the growing expectations of impending interest rate hikes.
The markets are currently factoring in the likelihood of higher interest rates, evident in the surging Treasury yields and an unexpected surge in U.S. inflation data. The financial community eagerly anticipates Powell’s upcoming speech, which is expected to reiterate his commitment to maintaining elevated interest rates for an extended duration.
The recent cancellation of a diplomatic summit involving U.S., Egyptian, and Palestinian leaders has also been a focal point in the markets, effectively maintaining gold near its recent peak, as investors remain vigilant about developments in the Middle East conflict.
Meanwhile, in the realm of other commodities, copper prices saw a decline due to concerns of a potential property market downturn in China, despite positive Chinese GDP data. Copper futures experienced a 0.3% drop, reaching $3.5713 per pound. This downturn was heavily influenced by the actions of Country Garden, a significant Chinese property developer, defaulting on a critical offshore bond repayment deadline, indicating a possible wave of defaults on foreign debt.
