Gold prices experienced a modest uptick in Asian trade on Friday, supported by indications of a cooling U.S. economy that bolstered demand for the yellow metal. However, gains were tempered as investors awaited key inflation data that could provide further cues on potential rate cuts.
Spot gold edged up by 0.2% to $2,335.86 per ounce, while gold futures for June delivery also rose by 0.2% to $2,335.68 per ounce by 01:00 ET (05:00 GMT).
Despite the recent increase, gold was on track for significant weekly losses after retreating from near-record highs observed over the past five sessions. The decline was attributed to diminishing expectations of early interest rate cuts by the Federal Reserve (Fed).
The dollar’s decline, in response to softer-than-expected gross domestic product (GDP) data, provided some relief for bullion prices. However, this relief was limited as a stronger GDP price index led traders to further scale back expectations for rate cuts by the Fed.
Gold’s weekly losses, projected at around 2%, reflected a continuation of the decline from peak levels reached earlier in April, when prices surged to approximately $2,430 per ounce.
One of the key factors weighing on gold was the reduced risk premium associated with Middle East tensions, particularly as the anticipated conflict between Iran and Israel failed to materialize. However, the primary driver of gold’s decline was the waning belief among traders that the Fed would implement interest rate cuts soon, as indicated by the CME Fedwatch tool showing expectations for rate cuts commencing in September or the fourth quarter.
Looking ahead, market attention was focused on the upcoming release of the Personal Consumption Expenditure (PCE) price index data, which is the Fed’s preferred measure of inflation and is expected to influence the central bank’s outlook. The prospect of “higher-for-longer” interest rates poses challenges for gold, increasing the opportunity cost of investing in the metal.
In parallel, other precious metals also advanced on Friday but were poised to conclude the week with notable losses. Platinum futures rose by 0.6% to $931.25 per ounce, while silver futures climbed by 0.9% to $27.60 per ounce.
Amidst broader commodity trends, copper prices rebounded to two-year highs on the back of a weaker dollar. Three-month copper futures on the London Metal Exchange increased by 0.8% to $9,983.50 per ton, while one-month copper futures rose by 0.7% to $4.5745 per pound.
The market focus also turned to a potential $39 billion bid by BHP Group Ltd for Anglo American PLC, which could lead to the creation of the world’s largest copper miner. However, reports suggested that Anglo’s board was largely dismissive of the offer. Additionally, tighter market conditions persisted following Chinese copper refiners signaling production cuts and stricter Western sanctions impacting Russian metal exports.
