Gold prices showed signs of stabilization during Asian trading on Wednesday, finding support from a weaker dollar while investors awaited key economic data for further direction.
After experiencing a notable retreat from recent record highs, gold prices saw a modest uptick as geopolitical tensions surrounding the conflict between Iran and Israel eased, reducing the demand for gold as a safe-haven asset.
Spot gold edged up by 0.3% to $2,330.05 per ounce, while gold futures expiring in June stabilized at $2,343.15 per ounce as of 00:04 ET (04:04 GMT). Despite this slight increase, spot prices remained approximately $100 below the record high reached earlier in April.
The decline in the dollar following softer-than-expected purchasing managers index data for April provided some relief for gold prices. However, the dollar’s overall strength throughout April, as expectations for early interest rate cuts by the Federal Reserve waned, limited the extent of gold’s gains.
While gold initially benefited from safe-haven demand amid geopolitical tensions, the lack of escalation in the Middle East left the precious metal vulnerable to concerns about sustained higher interest rates. Elevated interest rates diminish the attractiveness of gold as an investment due to increased opportunity costs.
In addition to gold, other precious metals also saw modest gains in Asian trading due to the weaker dollar, although they continued to recover from recent losses. Platinum futures rose by 0.4% to $924.50 per ounce, while silver futures increased by 0.5% to $27.485 per ounce.
Market attention now turns to forthcoming U.S. economic data releases, particularly first-quarter gross domestic product (GDP) data scheduled for Thursday and the Personal Consumption Expenditures (PCE) price index data on Friday, which serves as the Federal Reserve’s preferred inflation gauge. Recent indications of stubborn U.S. inflation have led to a reassessment of expectations for a rate cut in June.
In the industrial metals sector, copper prices registered gains on Wednesday, buoyed by the softer dollar. However, prices remained below recent peaks following an announcement by top copper producer Chile regarding plans to increase output this year. Weak U.S. PMI data, indicating an unexpected contraction in manufacturing activity, also tempered the outlook for copper demand.
Three-month copper futures on the London Metal Exchange rose by 0.8% to $9,817.50 per ton, while one-month copper futures increased by 1.1% to $4.4710 per pound.
