In Asian trading on Thursday, gold prices experienced a decline primarily influenced by the strength of the US dollar and US Treasury yields. Traders remained cautious ahead of key economic data releases that are expected to impact interest rate decisions.
The US dollar reached a more than two-week high due to concerns about sustained high interest rates in the US, leading traders to maintain a bullish bias towards the greenback. Concurrently, benchmark US Treasury yields saw an uptick this week.
This market trend prompted some investors to shift their funds away from gold, causing the precious metal to retreat further from the record highs it reached last week. Most of the gains made by gold earlier in the week were also erased.
Spot gold fell by 0.2% to $2,332.98 per ounce, while gold futures dropped by 0.4% to $2,331.60 per ounce just before their expiration on June 1.
Gold Prices Under Pressure as Market Awaits Further Rate Indications
Anticipation of upcoming US economic data releases, expected to influence interest rate expectations, has placed pressure on gold prices. The revised first-quarter gross domestic product (GDP) data scheduled for release later on Thursday is anticipated to reflect some resilience in the economy. A robust economic performance provides the Federal Reserve with more leeway to maintain higher interest rates for an extended period.
Of particular interest is the Personal Consumption Expenditures (PCE) price index data set to be released on Friday, which serves as the Fed’s preferred inflation measure.
These data releases follow warnings from several Fed officials regarding the bank’s hesitance to initiate interest rate cuts, leading traders to adjust their expectations and scale back projections for a rate cut in September.
The prospect of prolonged high interest rates is unfavorable for gold and other precious metals, as it increases the opportunity cost of investing in these assets.
Other precious metals also experienced declines in line with this sentiment. Platinum futures dropped by 0.6% to $1,040.15 per ounce, while silver futures declined by nearly 2% to $31.767 per ounce.
Copper Prices Retreat as Speculative Enthusiasm Wanes
In the realm of industrial metals, copper prices retreated further from recent record highs on Thursday as speculative fervor subsided. Traders are now awaiting additional cues on demand from key economic indicators from China, the largest importer of copper globally.
Benchmark copper futures on the London Metal Exchange fell by 1.3% to $10,346.50 per tonne, while one-month copper futures declined by 1.1% to $4.7237 per pound.
Market participants are eagerly awaiting the Purchasing Managers Index (PMI) from China, scheduled for release on Friday. This data is expected to offer insights into business activity in the country, aiding traders in assessing the outlook for copper demand.
