Gold prices pulled back in Asian trading on Monday, easing from recent gains as traders showed a preference for the dollar ahead of key U.S. inflation figures scheduled for later in the week.
Last week, gold showed strength amid signs of a cooling U.S. economy, sparking speculation about potential interest rate cuts by the Federal Reserve in 2024. However, gold remained well below its record highs reached in April and is expected to trade within a range leading up to this week’s inflation data.
Spot gold slipped by 0.1% to $2,357.35 per ounce, while gold futures expiring in June declined by 0.5% to $2,363.65 per ounce by 23:55 ET (03:55 GMT).
Focus on U.S. Inflation Data
The gold and broader metal markets remained cautious ahead of key U.S. inflation readings scheduled for this week.
Producer Price Index (PPI) data for April is set to be released on Tuesday, followed by the Consumer Price Index (CPI) data on Wednesday, which is more closely monitored.
Any signs of persistent inflation are likely to diminish expectations of U.S. interest rate cuts this year, which could boost the dollar and exert downward pressure on metal prices.
Market Reaction and Precious Metals
The dollar stabilized after recent volatility, with Friday’s data showing a substantial decline in U.S. consumer confidence for May, while inflation expectations remained elevated for the coming year.
Broader precious metal prices were under pressure ahead of the inflation data, as higher interest rates would increase the opportunity cost of investing in metal markets.
Platinum futures held steady at $1,005.05 per ounce, while silver futures dipped by 0.8% to $28.288 per ounce.
Industrial Metals and Chinese Cues
In the industrial metals sector, copper prices edged higher on Monday, staying close to two-year highs amid optimism about tighter markets. However, further gains were tempered by mixed signals from China, the top importer of copper.
Three-month copper futures on the London Metal Exchange rose by 0.3% to $10,080.50 per ton, while one-month copper futures gained 0.2% to $4.6630 per pound.
Chinese inflation data released over the weekend showed an increase in Consumer Price Index (CPI) inflation but a continued decline in Producer Price Index (PPI) inflation for the 19th consecutive month.
Despite mixed inflation readings, Beijing’s easing of restrictions on the property sector could potentially support copper demand in the coming months.
