Gold prices rose slightly on Thursday after reacting positively to the Federal Reserve’s rate hike in the prior session, with weakness in the dollar offering more breathing room to metal markets.
The greenback retreated on Wednesday after the Fed hiked rates by 25 basis points (bps) as expected, and also softened its language with regards to a potential U.S. recession. But the central bank also left the door open to another potential hike in September, citing strength in the labor market and relatively sticky inflation.
Gold saw some strength, moving further into the high-$1,900 an ounce territory as the central bank signaled a data-driven approach to future rate hikes.
But the yellow metal still remained in a tight trading range seen over the past two weeks, and struggled below the $2,000 an ounce level that is expected to herald more gains.
Spot gold was flat at $1,972.49 an ounce, while gold futures expiring in August rose 0.1% to $1,972.70 an ounce by 20:57 ET (00:57 GMT). Further gains in yellow metal were stifled as investors awaited more central bank decisions this week.
ECB, BOJ meetings also due this week
Beyond the Fed, focus this week is also on interest rate decisions from the European Central Bank (ECB) and the Bank of Japan (BOJ). The ECB is widely expected to hike interest rates by 25 bps later in the day.
While the BOJ is expected to hold ultra-low rates and maintain its dovish policies on Friday, a minority of traders are also positioning for a potential hawkish surprise from the Japanese bank, given that inflation is trending above its annual target.
Rising interest rates bode poorly for metal markets, and are expected to limit any major gains in gold this year. The Fed also downplayed the prospect of a rate cut this year, pointing to continued pressure on metal markets from U.S. rates remaining at their highest level in 22 years.
Other precious metals also advanced on Thursday, benefiting from a weaker dollar. Platinum futures rose 0.1%, while silver added 0.4%.
Copper edges higher, China stimulus in focus
Among industrial metals, copper prices rose slightly on Thursday, also benefiting from weakness in the dollar. But gains in the red metal were limited as markets awaited more cues on stimulus measures in major importer China.
Copper futures rose 0.2% to $3.9110 a pound and was trading up for the week, having benefited from Chinese officials promising more stimulus measures to support an economic recovery.
But weak manufacturing activity in the rest of the globe still presents more pressure on copper demand.
