In Asian trading on Tuesday, gold prices found stability, benefiting from a marginally weaker dollar as market participants prepared for significant inflation data releases, particularly from the United States.
Despite reclaiming some ground lost last week, the yellow metal remained notably below recent peak levels, with diminished safe-haven demand and escalating concerns about elevated U.S. interest rates prompting traders to shift towards the dollar and Treasuries.
However, the greenback experienced a slight decline in low-volume trading, attributed to the Memorial Day holiday observed on Monday.
Spot gold maintained its position at $2,351.03 per ounce, while gold futures set to expire in June steadied at $2,352.10 per ounce by 23:51 ET (03:1 GMT). Notably, spot gold had achieved a record high of approximately $2,450 per ounce last week.
Traders exercised caution regarding the yellow metal ahead of the release of crucial PCE price index data scheduled for Friday. This data serves as the Federal Reserve’s preferred inflation metric and is expected to influence the outlook for interest rate adjustments.
The sentiment was further influenced by recent remarks from several Fed officials indicating that persistent inflationary pressures might delay potential rate cuts this year. Consequently, traders adjusted their expectations, with a growing probability that the Fed might maintain rates in September, contrasting earlier anticipations of a 25 basis point reduction.
Such developments led to a retreat in gold prices from their recent highs last week as market sentiment tilted towards the greenback.
Additionally, before the PCE data, inflation reports from Australia, Japan, and Germany are slated for release this week.
In other precious metals, slight gains were observed on Tuesday, with platinum futures climbing by 0.2% to $1,066.95 per ounce, while silver futures rose by 0.3% to $31.950 per ounce.
Amidst industrial metals, copper prices saw an uptick against a softer dollar backdrop, with attention primarily focused on forthcoming data from China, a key importer. Benchmark copper futures on the London Metal Exchange surged nearly 2% to $10,532.50 per tonne, while one-month copper futures edged up by 0.3% to $4.8244 per pound.
Both copper contracts remained below recent record highs but maintained substantial gains throughout May, driven by speculative activity amid expectations of robust demand and constrained supplies. The market awaits key purchasing managers index data from China, scheduled for release on Friday, to gauge business activity in the world’s largest copper importer.
