Gold prices experienced minimal movement in Asian trading on Friday, with concerns over stronger-than-expected inflation data fueling apprehensions that the Federal Reserve may signal prolonged higher interest rates at an upcoming meeting. However, this sentiment failed to dampen a rally in copper prices, which surged to new 11-month highs driven by expectations of significantly tighter Chinese supplies.
While copper prices soared, bullion prices faced pressure due to a strengthening dollar. The greenback reached an over one-week high following robust inflation readings earlier in the week, with traders positioning themselves ahead of the upcoming Fed meeting.
In the early hours of trading, spot gold inched up by 0.1% to $2,163.98 per ounce, while gold futures for April delivery steadied at $2,168.05 per ounce by 01:17 ET (05:17 GMT).
Gold prices are witnessing a decline from record highs reached earlier in the week, resulting in weekly losses. The primary driver behind this downturn is the growing apprehension surrounding the upcoming Fed meeting. Concerns have intensified as consumer and producer inflation signals have consistently exceeded expectations for the third consecutive month.
The prevailing fear among traders is that any hawkish signals from the Fed, particularly in light of persistent inflation, could lead to higher-for-longer interest rates. Such a scenario tends to adversely affect gold and other non-yielding assets.
Despite the near-term weakness in gold prices, analysts at ANZ believe that the yellow metal still holds favorable prospects for the remainder of the year. They have even revised their 2024 target price for gold upwards to $2,300 per ounce from $2,200 per ounce.
In contrast to gold, other precious metals demonstrated strength on Friday and were poised to outperform gold for the week. Platinum futures rose by 0.2% to $932.50 per ounce, while silver futures climbed by 0.6% to $25.212 per ounce.
