Gold prices experienced a retreat in Asian trade on Monday, remaining within a recent trading range as apprehensions about prolonged U.S. interest rates intensified ahead of crucial economic readings.
The precious metal struggled to make substantial price gains in recent weeks, as multiple Federal Reserve officials conveyed the central bank’s reluctance to implement interest rate cuts. The persistence of U.S. inflation and the robustness of the job market further solidified the notion that rate cuts in May and June were becoming less likely, leading traders to adjust their expectations.
Despite these factors, gold found support from safe-haven demand, limiting its losses. Concerns about a potential recession in Japan and the UK, coupled with ongoing geopolitical disruptions in the Middle East, contributed to the safe-haven appeal of gold.
In terms of prices, spot gold declined by 0.2% to $2,032.32 per ounce, while gold futures expiring in March dropped by 0.4% to $2,041.85 per ounce as of 23:52 ET (04:52 GMT).
Market focus has now shifted to the upcoming U.S. Personal Consumption Expenditures (PCE) price index data, the Federal Reserve’s preferred inflation gauge, expected later in the week. This reading is anticipated to provide further insights into U.S. inflation, following a series of sticky readings for December and January.
Several Fed officials are also scheduled to speak later in the week, likely reiterating the central bank’s outlook for higher-for-longer interest rates amid concerns about elevated inflation.
In addition to the PCE data, the market awaits a second reading on fourth-quarter gross domestic product (GDP), expected to show some cooling in U.S. economic growth, although not to an extent warranting early interest rate cuts.
The prospect of higher-for-longer rates has negative implications for gold prices, as it increases the opportunity cost of investing in the precious metal.
Other precious metals, including platinum futures expiring in April, fell by 0.7% to $901.35 per ounce, while silver futures expiring in May retreated by 0.5% to $23.078 per ounce.
