Gold prices steadied in Asian trade on Friday after experiencing steep declines throughout the week due to concerns regarding higher U.S. interest rates, which pulled the yellow metal down from record highs.
The surge in rate fears has led to an uptick in the dollar’s value and has also exerted pressure on broader metal prices. Notably, copper prices have also faced significant declines from their record highs this week.
Despite initial expectations, the death of the Iranian President did not escalate tensions in the Middle East, resulting in diminished safe-haven demand for gold.
Spot gold saw a modest increase of 0.2%, reaching $2,332.77 an ounce, while gold futures expiring in June dipped slightly by 0.1%, standing at $2,333.85 an ounce as of 00:37 ET (04:37 GMT).
Gold Navigates Steep Weekly Losses Amid Rate Concerns
Gold is poised to incur losses of approximately 3.4% for the week, experiencing a sharp decline from its record highs earlier in the week.
The decline in safe-haven demand for gold left the precious metal susceptible to headwinds stemming from concerns regarding prolonged high interest rates.
The hawkish stance from the Federal Reserve, coupled with growing concerns over persistent inflation, has led some policymakers to consider further rate hikes. While the likelihood of additional rate hikes seems slim, traders have significantly adjusted their expectations for potential rate cuts in 2024. According to the CME Fedwatch tool, traders are now equally pricing in the probability of a rate cut or hold in September.
The prospect of sustained high interest rates poses challenges for gold, as it elevates the opportunity cost of investing in the yellow metal.
Precious Metals Show Resilience Despite Weekly Declines
Other precious metals also stabilized on Friday, albeit experiencing weekly losses. Platinum futures rose by 0.4% to $1,029.90 an ounce, while silver futures increased by 0.4% to $30.582 an ounce.
Meanwhile, copper futures on the London Metal Exchange and one-month U.S. copper futures both saw gains of 0.8% and 0.7%, respectively. However, both contracts retreated from their record highs earlier in the week amidst a winding down of speculative fervor. Traders are now closely monitoring physical deliveries on contracts for insights into copper supply conditions.
Furthermore, cooling sentiment towards China, the top copper importer, has added to the pressure on copper prices. Despite optimism surrounding potential stimulus measures, concerns regarding trade tensions with the U.S. and Taiwan have tempered market sentiment.
