Gold prices continued their downward trend in Asian trade on Thursday, retreating further from recent record highs as concerns about rising interest rates and diminished safe-haven demand weighed on the precious metal.
Alongside gold, industrial metals also experienced losses, with copper prices sharply declining from their record levels due to profit-taking and pressure from a stronger dollar. However, copper prices stabilized somewhat during Asian trading hours.
Spot gold dropped 0.3% to $2,372.38 per ounce, while gold futures for June delivery fell 0.8% to $2,375.15 per ounce by 00:22 ET (04:22 GMT). These prices were notably below the record high of $2,450 per ounce set earlier in the week.
The decline in metal prices was exacerbated by a rebound in the dollar overnight, reaching a one-week high following the release of minutes from the Federal Reserve’s late-April meeting. The minutes revealed growing concerns among policymakers about persistent inflation, leading some to consider further interest rate hikes, albeit as an unlikely scenario.
Despite this, the Fed is expected to maintain elevated interest rates for an extended period due to lingering concerns about inflation. Recent statements from several policymakers underscored the Fed’s cautious stance on inflation reaching its 2% annual target in the near term.
The prospect of prolonged high interest rates spells trouble for gold and other precious metals, as it increases the opportunity cost of holding these assets. This factor has contributed to gold’s struggle to maintain its record highs throughout the year.
Moreover, the absence of significant escalation in geopolitical tensions in the Middle East following the death of the Iranian President dampened safe-haven demand for gold.
In addition to gold, other precious metals also experienced declines on Thursday. Platinum futures dropped 0.1% to $1,041.20 per ounce, while silver futures sank 2.5% to $30.727 per ounce.
Meanwhile, benchmark copper futures on the London Metal Exchange fell 0.4% to $10,372.50 per ton, while one-month copper futures stabilized at $4.8030 per pound. Both contracts retreated from their record highs earlier in the week as speculative trading in copper showed signs of stabilizing and concerns about China’s economy resurfaced amid escalating trade tensions with the United States. Markets were awaiting further details on China’s stimulus measures and their potential impact on metal demand.
