Gold Prices Steady Amid Inflation Concerns; Copper Slips on Weak China Data
Gold Prices Steady Ahead of Key U.S. Inflation Data
Gold prices remained stable in Asian trade on Friday, with traders cautious before the release of key U.S. inflation data. This data is expected to significantly influence the outlook for interest rates.
Industrial Metals See Mixed Movement
Copper Prices Slip on Weak China PMI Data
Among industrial metals, copper prices declined, influenced by weaker-than-expected purchasing managers index (PMI) data from China, the world’s top importer of copper.
Dollar Slide Offers Limited Relief
Metal markets experienced some relief on Friday as the dollar fell from its two-week highs in overnight trade, driven by weak gross domestic product (GDP) figures. However, this relief was short-lived due to persistent fears of sticky inflation and high interest rates, with critical inflation data on the horizon.
Gold Market Update
Spot gold steadied at $2,342.86 an ounce, while gold futures for August delivery dipped 0.1% to $2,363.80 an ounce by 00:19 ET (04:19 GMT). Despite this, gold is still poised to gain about 2.6% in May, having surged to record highs earlier in the month.
Gold Trims May Gains Ahead of PCE Data
Gold is currently trading about $100 below its May record highs, as concerns over prolonged high U.S. interest rates prompted some profit-taking. Several Federal Reserve officials have recently cautioned that the central bank is not yet ready to start cutting interest rates due to persistent inflation.
The upcoming Personal Consumption Expenditures (PCE) price index data, the Fed’s preferred inflation gauge, is due later on Friday. It is expected to show that inflation cooled slightly in April but remained significantly above the Fed’s 2% annual target.
Impact of High Interest Rates on Precious Metals
Higher interest rates are generally unfavorable for gold and other precious metals, as they increase the opportunity cost of holding these non-yielding assets.
Platinum and Silver Set for Strong May Gains
Other precious metals also saw declines on Friday, experiencing some profit-taking after substantial gains in May. Platinum futures fell 0.6% to $1,028.95 an ounce, while silver futures dropped 1.6% to $31.030 an ounce. Nonetheless, both metals are up 9% and 17%, respectively, in May, benefiting from speculative trading that boosted industrial metal prices.
Copper Prices Stabilize Amid Weak Economic Indicators
Benchmark copper futures on the London Metal Exchange held steady at $10,141.0 a tonne, while one-month copper futures decreased by 0.5% to $4.6350 a pound. Despite reaching record highs earlier, both contracts have wiped out most of their gains through May due to the fading speculative frenzy and significant profit-taking.
Weak China PMI Data Affects Copper Sentiment
Sentiment towards copper was further dampened by disappointing PMI data from China. The manufacturing sector unexpectedly contracted in May, while non-manufacturing activity grew at a slower pace, impacting the demand outlook for copper.
