Gold Prices Remain Steady in Asian Trade
Gold Prices Stagnant in Asian Trade
Gold prices remained largely unchanged in Asian trade on Thursday, as they continued to hover below crucial support levels. The yellow metal’s appeal has been waning due to the diminishing prospect of higher U.S. interest rates.
Relief for Bullion Prices
Bullion prices found some relief from mild losses in the dollar, which stabilized after surging to three-month highs earlier in the week. However, the greenback is expected to see further near-term gains, as traders are reducing their expectations for early rate cuts by the Federal Reserve.
Impact of Fed’s Policy on Gold Prices
A number of Fed officials have cautioned that the central bank will maintain higher rates if inflation remains persistent, which does not bode well for gold. The higher rates increase the opportunity cost of investing in bullion.
Gold Prices and Support Levels
Gold was flat at $1,992.27 an ounce, while gold futures expiring in April fell slightly to $2,003.70 an ounce. Both instruments remained pinned at two-month lows, and were close to testing support levels around $1,970 and $1,980 an ounce.
Market Expectations for Rate Cuts
Market data indicated that traders were steadily reducing their expectations for rate cuts in May and June, amidst growing uncertainty over the timing of the Fed’s interest rate adjustments. The central bank has signaled an eventually cut in interest rates this year, but has not provided clear cues on the potential timing and scale of the cuts.
Factors Influencing Gold Prices
U.S. inflation data for January, due on Friday, is expected to provide more insights into the trajectory of inflation, while several more Fed officials are set to speak in the coming days, offering additional cues on monetary policy.
Impact of U.S. Interest Rates on Gold
The rise in U.S. interest rates has limited significant gains in gold over the past two years, despite deteriorating economic conditions across the globe. This trend is anticipated to persist in the near-term.
Copper Prices and Economic Readings
Copper prices remained largely unchanged on Thursday and were poised for a subdued weekly performance. Weak GDP readings from various countries have clouded the outlook for the red metal.
Copper Prices and Weak Economic Data
Copper futures expiring in March rose 0.1% to $3.7067 a pound, finding some relief as the dollar retreated from three-month peaks. However, concerns over slowing economic growth persisted, as traders feared weaker demand for copper this year due to weak GDP readings from China and the Eurozone.
