Gold Prices Edge Up in Asian Trade, Eyes on U.S. Inflation Data
Gold Prices Recover Slightly in Asian Trade
In Asian trade on Tuesday, gold prices showed a modest rise, bouncing back marginally from significant losses experienced in the previous session. The market's attention remained firmly fixed on the forthcoming U.S. inflation data, which is anticipated to provide further insights into the trajectory of interest rates.
Gold's Performance and Market Dynamics
Despite displaying some strength in the preceding week, gold continued to trade well below the record highs seen in April. Traders maintained a bias towards the dollar amid concerns regarding the potential for sustained elevated U.S. rates.
Spot gold managed to climb by 0.3% to reach $2,343.60 an ounce, while gold futures expiring in June also recorded a similar gain, rising by 0.3% to hit $2,349.05 an ounce by 00:22 ET (04:22 GMT).
Awaiting PPI and CPI Inflation Data
Investors eagerly awaited the release of the U.S. producer price index (PPI) data scheduled for later on Tuesday, with the more closely-watched consumer price index (CPI) reading slated for Wednesday.
These inflation readings are poised to play a pivotal role in shaping expectations regarding U.S. interest rates. Previous inflation data, indicating overheating in the first quarter, led to a significant reduction in market bets on interest rate cuts for the remainder of the year.
Impact of Interest Rates on Gold
While the prospect of high-for-longer interest rates poses challenges for gold, the precious metal found support from increased safe-haven demand amidst escalating geopolitical tensions in the Middle East. However, some easing of tensions, particularly between Iran and Israel, left gold vulnerable to pressure stemming from interest rate concerns.
Higher interest rates typically unfavorably impact gold prices, as they elevate the opportunity cost of holding non-yielding assets like gold.
Performance of Other Precious Metals
In addition to gold, other precious metals also saw gains on Tuesday. Platinum futures rose by 0.1% to reach $1,011.05 an ounce, while silver futures recorded a more substantial increase of 0.9% to hit $28.688 an ounce.
Copper Prices Surge on China Stimulus Optimism
Meanwhile, copper prices surged to two-year highs as traders welcomed encouraging signals from China regarding a significant bond issuance aimed at stimulating the economy.
Chinese authorities announced plans to issue 1 trillion yuan ($138 billion) worth of bonds with maturities ranging from 20 to 40 years, starting this week. This issuance is primarily intended to bolster infrastructure spending and facilitate economic recovery in the country.
The news of China's bond issuance overshadowed concerns about the country's property market, despite another major developer defaulting on its bond payments.
