Gold prices declined in Asian trade on Tuesday, remaining within a narrow range in the low $2,300s. This movement was influenced by the recent strength of the dollar and the anticipation of significant inflation data, which kept traders cautious about investing in the yellow metal.
Limited Relief from Dollar Movement
Metal markets found little relief from an overnight drop in the dollar, as the greenback continued to be favored amid ongoing uncertainty over U.S. interest rates. Spot gold fell 0.4% to $2,325.56 an ounce, while gold futures decreased 0.3% to $2,337.35 an ounce by 00:10 ET (04:10 GMT).
Gold’s Trading Range Amid Inflation Concerns
Over the past week, gold has been confined to a trading range around the low $2,300 an ounce level. Traders are uncertain about the likelihood of U.S. interest rate cuts this year. While May’s inflation data was somewhat positive, it still indicated persistent price pressures. Additionally, unexpectedly strong purchasing managers index readings for June raised concerns that the U.S. economy’s strength will allow rates to remain high for longer.
This week, the focus is primarily on the PCE price index data, the Federal Reserve’s preferred inflation gauge, due on Friday. The reading is expected to show a slight cooling of inflation but will likely remain well above the central bank’s 2% annual target.
Impact of High Rates on Metal Markets
High interest rates negatively affect metal markets as they increase the opportunity cost of investing in non-yielding assets like gold. Other precious metals showed mixed results on Tuesday but stayed within their recent trading ranges. Platinum futures rose 0.4% to $1,016.55 an ounce, while silver futures fell 0.1% to $29.817 an ounce.
Copper Prices and China Concerns
In the realm of industrial metals, copper prices saw an increase on Tuesday, slightly recovering from recent losses. Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,703.50 a tonne, while one-month copper futures increased 0.5% to $4.4413 a pound.
However, sentiment towards copper remains fragile due to concerns about China, its largest importer. Beijing has hinted at the possibility of a trade war with the European Union and the U.S. in response to steep import duties on Chinese electric vehicles. Both copper contracts have experienced significant declines in recent weeks as doubts about a global economic recovery this year and negative sentiment towards China have emerged.
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