In Asian trading on Tuesday, gold prices experienced a slight decline but managed to maintain levels above key support thresholds as market sentiment remained cautious ahead of a significant Federal Reserve meeting later in the week.
While copper prices saw a minor decrease, they continued to hover near 11-month highs following an impressive rally over the preceding three sessions.
Gold prices showed signs of recovery earlier in the week, reclaiming the $2,150 per ounce support level on Monday amidst ongoing uncertainty surrounding the Fed‘s stance. However, the precious metal still remained notably below the record highs achieved earlier in March.
Spot gold slipped by 0.1% to $2,158.26 per ounce, while gold futures expiring in April saw a similar 0.1% decline to $2,161.35 per ounce by 01:30 ET (05:30 GMT).
The strength of the US dollar exerted downward pressure on gold prices, with traders leaning towards the greenback in anticipation of the upcoming Fed meeting and amid dovish signals from the Bank of Japan. The dollar index reached a two-week high on Tuesday following robust gains in the previous two sessions.
Market expectations anticipate the Fed to maintain interest rates at their current levels at the conclusion of the two-day meeting on Wednesday. However, concerns persist regarding potentially hawkish signals from the central bank, particularly regarding any adjustments to its interest rate cut forecasts in response to recent higher-than-expected inflation data.
The possibility of prolonged higher interest rates tends to unfavorably impact gold and other precious metals, as elevated rates increase the opportunity cost of investing in these assets.
Meanwhile, platinum futures experienced a 0.7% decline to $913.15 per ounce, while silver futures saw a 0.3% drop to $25.192 per ounce.
Although copper prices edged lower, they remained near recent peaks. Three-month copper futures on the London Metal Exchange fell by 0.5% to $9,046.0 per ton, while one-month U.S. copper futures decreased by 0.6% to $4.1052 per pound. The rally in copper was sustained by the anticipation of a deficit in Chinese refined copper supplies and reinforced by stronger-than-expected industrial production data from China, the world’s largest copper importer.
