Gold Prices Remain Steady Amidst U.S. Interest Rate Expectations
Market Overview
Gold prices showed minimal movement in Asian trading on Monday, with little relief from recent losses. Traders continued to factor in expectations of higher U.S. interest rates ahead of the Federal Reserve meeting scheduled later in the week.
Steady Gold Prices
Spot gold steadied at $2,334.66 an ounce, while gold futures expiring in June remained flat around $2,345.60 an ounce by 01:10 ET (05:10 GMT).
Fed Meeting Awaited After PCE Data Shock
The relatively strong dollar and a hotter-than-expected reading on the PCE price index, the Fed's preferred inflation gauge, weighed on gold prices. Traders adjusted their expectations for early rate cuts by the Fed, now anticipating rate trimming to begin in September or the fourth quarter.
Impact of Higher U.S. Interest Rates
Expectations of "higher-for-longer" interest rates negatively affect gold prices, as they increase the opportunity cost of investing in the precious metal. Despite recent declines, gold prices remained positive for the year, driven by concerns that elevated interest rates could dampen global economic growth.
Performance of Other Precious Metals
Platinum futures rose 0.6% to $930.05 an ounce, while silver futures increased by 0.3% to $27.613 an ounce after experiencing significant losses over the past two weeks.
Copper Prices Rise to Two-Year Highs on Optimism Over Chinese Demand
Boost in Copper Prices
Copper prices surged to two-year highs on Monday as optimism about strong Chinese demand grew. Beijing's decision to relax restrictions on house buying in major cities to support the property market contributed to the positive sentiment.
Key Drivers of Chinese Demand
China's property market plays a crucial role in the economy and is a major driver of copper demand in the world's largest importer of the metal.
Tightening Supplies and Sanctions
Expectations of tighter supplies have bolstered copper prices, especially with the West imposing stricter sanctions on Russian metal exports in recent weeks.
Focus on Chinese Purchasing Managers Index (PMI) Data:
Investor attention is now on key Chinese PMI data scheduled for release this week, providing insights into the world's largest copper importer's economic activity and its impact on metal demand.
Market Response
Three-month copper futures on the London Metal Exchange climbed 0.4% to $10,015.0 a ton, marking their highest level since early May 2022. One-month copper futures rose 0.2% to $4.5962 a pound.
