Gold prices fluctuated in a narrow range during Asian trading on Monday, grappling with significant losses from the previous week as concerns over high U.S. interest rates loomed ahead of a Federal Reserve meeting and critical inflation data.
The yellow metal experienced a sharp decline last week after nonfarm payrolls data exceeded expectations on Friday, prompting traders to reassess the likelihood of a rate cut by the Fed in September.
In early trading, spot gold inched up 0.1% to $2,295.7 per ounce, while gold futures for August delivery dropped 0.6% to $2,312.30 per ounce by 00:44 ET (04:44 GMT).
Gold Traders on Edge with Fed Meeting and CPI Data Approaching
Market attention is firmly fixed on the forthcoming Federal Reserve meeting, with a rate decision anticipated on Wednesday. While the central bank is expected to maintain current rates, any indications regarding future policy directions will be scrutinized, especially given recent signs of enduring U.S. inflation and a robust labor market.
Several Fed officials have cautioned that the central bank may sustain high rates for an extended period due to persistent inflation and labor market strength. The stronger-than-expected nonfarm payrolls data on Friday reinforced this perspective.
Ahead of the Fed’s decision, the release of the key consumer price index (CPI) inflation data this week is highly anticipated, with expectations that inflation remained well above the Fed’s 2% annual target in May.
Gold and other metal prices faced significant pressure on Friday due to a marked reduction in bets on a September rate cut. This trend is likely to persist in the coming days.
Additionally, the yellow metal was impacted by reports that the People’s Bank of China, a major bullion buyer, had significantly reduced its purchasing activities in May.
Other Precious Metals See Gains
Despite last week’s declines, other precious metals showed signs of recovery on Monday. Platinum futures increased by 0.7% to $977.05 per ounce, while silver futures rose 0.9% to $29.690 per ounce.
A resurgence in the dollar, driven by diminished expectations of rate cuts, exerted downward pressure on broader metal prices.
Copper Prices Struggle Amid Rate Fears and China Uncertainty
Industrial metals, particularly copper, continued to struggle with steep losses from last week, influenced by a combination of Fed-related concerns and waning optimism regarding demand from China, the top importer.
Benchmark copper futures on the London Metal Exchange edged up 0.2% to $9,779.50 per tonne, while one-month copper futures increased by 0.6% to $4.4735 per pound.
Both contracts are recovering from substantial declines from record highs reached in May. The initial optimism over strong demand has been largely tempered by fears that high interest rates will dampen global economic activity, thereby reducing copper demand.
Mixed economic signals from China have further fueled concerns about demand. While import data indicated strong copper demand, other economic indicators presented a more ambiguous picture of the country’s economic health.
