Gold prices rebounded from overnight losses in Asian trade on Thursday, yet remained below recent peaks due to concerns over the prospect of higher-for-longer interest rates and pressure from a strong dollar.
The yellow metal had surged to record highs last week amidst escalating tensions following Iran’s strike against Israel, bolstering safe-haven demand. However, fears of a prolonged conflict abated slightly this week as Israel refrained from immediate retaliation.
While pressure from the dollar eased somewhat this week, with the greenback retreating from over five-month highs on Wednesday, gold failed to capitalize on this weakness amid expectations of sustained higher interest rates.
Spot gold rose by 0.6% to $2,374.31 an ounce, while gold futures expiring in June saw a marginal increase to $2,389.05 an ounce by 00:21 ET (04:21 GMT). Spot prices experienced a 0.9% decline on Wednesday, driven by profit-taking after reaching record highs of over $2,340 an ounce last week.
Although gold witnessed significant profit-taking this week, spot prices remained in overbought territory, as indicated by their 14-day relative strength index. However, the index was nearing neutral territory below 70 points, potentially signaling room for further near-term gains.
Nevertheless, uncertainties persist regarding additional advances in gold amid expectations of sustained higher U.S. interest rates. Strong inflation data and hawkish signals from the Federal Reserve led traders to largely discount expectations for a June rate cut by the central bank.
In contrast, other precious metals displayed mixed performance on Thursday after also experiencing weakness earlier in the week. Platinum futures declined by 0.3% to $949.60 an ounce, while silver futures rose by 0.2% to $28.465 an ounce.
