Gold prices decrease as US inflation examination approaches
Gold prices pulled back during Asian trading on Monday, consolidating recent gains as traders leaned towards the dollar in anticipation of crucial U.S. inflation figures later in the week.
Last week, the yellow metal exhibited strength as signs of a cooling U.S. economy prompted speculation about potential interest rate cuts by the Federal Reserve in 2024. However, gold remained notably below its peak in April and is anticipated to trade within a narrow range prior to this week’s inflation data.
Spot gold slipped to $2,357.35 per ounce, while gold futures expiring in June dropped to $2,363.65 per ounce.
Concerns loom over gold and other metal markets in anticipation of key U.S. inflation readings scheduled for this week. Tuesday will see the release of the producer price index data for April, followed by the closely monitored consumer price index data on Wednesday.
Any indications of persistent inflation are likely to diminish expectations of U.S. interest rate cuts in the near term, thereby bolstering the dollar and putting pressure on metal prices. Despite recent volatility, the greenback stabilized. Friday’s data revealed a notable decline in U.S. consumer confidence for May, yet inflation forecasts for the upcoming year remained high.
Ahead of this week’s inflation data, broader precious metal prices faced downward pressure, given that prolonged higher interest rates increase the opportunity cost of investing in metal markets. Platinum futures held steady at $1,005.05 per ounce, while silver futures dipped 0.8% to $28.288 per ounce.
Meanwhile, among industrial metals, copper prices saw an uptick on Monday, remaining near two-year highs amidst optimism regarding tighter markets. However, further gains were tempered by mixed signals from China, the largest importer of copper.
Three-month copper futures on the London Metal Exchange rose 0.3% to $10,080.50 per ton, while one-month copper futures edged up 0.2% to $4.6630 per pound.
Chinese inflation data released over the weekend indicated a rise in CPI inflation. However, PPI inflation, a key indicator of local factory and business activity, continued its decline for the 19th consecutive month. The varied inflation readings were countered by Beijing’s decision to ease more restrictions on the struggling property sector, potentially bolstering copper demand in the coming months.
