Gold prices hover near record highs as markets await further interest rate cues
Gold prices remained relatively unchanged in Asian trade on Tuesday, staying close to record highs amid uncertainty surrounding the global economy and speculation about early interest rate cuts, fueling a significant surge in bullion.
However, the rally seemed to have paused, awaiting further signals on the U.S. economy, especially from comments by the Federal Reserve and key labor market data expected later in the week.
Spot gold increased by 0.2% to $2,118.59 per ounce, while gold futures expiring in April remained steady near $2,126.75 per ounce by 00:40 ET (05:40 GMT). Both instruments closed above $2,100 per ounce for the first time ever on Monday and were now nearing record highs of $2,135.72 per ounce for spot gold and $2,130.20 per ounce for futures.
Demand for the yellow metal was bolstered by indications of a cooling U.S. economy, alongside signs of a recession in Europe and Japan. Additionally, underwhelming growth forecasts from China contributed to the demand for safe-haven assets.
Powell’s testimony and payroll data inject caution into the atmosphere
However, further advances in gold were tempered by anticipation of additional signals regarding U.S. interest rates, especially from Federal Reserve Chair Jerome Powell later this week.
Powell is scheduled to testify before Congress on Wednesday, with analysts anticipating that the Fed Chair will predominantly uphold his hawkish rhetoric.
Following Powell’s testimony, the nonfarm payrolls data due on Friday is anticipated to offer further insights into the labor market, which has been a crucial factor for the Fed in determining interest rate adjustments.
High U.S. interest rates have consistently posed a significant risk factor for gold prices, constraining any attempts by the yellow metal to reach record highs. Elevated rates exert pressure on gold by raising the opportunity cost of investing in the precious metal.
Other precious metals experienced some gains, albeit briefly, this week. Platinum futures dropped by 0.7% to $896.60 per ounce after briefly surpassing the $900 level, while silver futures increased by 0.2% to $24.040 per ounce.
Copper remains subdued as China’s economic objectives fall short of expectations
Among industrial metals, copper futures expiring in May declined by 0.1% to $3.8507 per pound.
Prices of the red metal remained relatively unchanged in response to largely underwhelming economic signals from China, the top importer.
Beijing has set a 5% GDP target for 2024, mirroring that of 2023, while also pledging further policy support for the economy. However, the absence of clear, tangible measures to bolster growth has dampened optimism regarding China’s economic outlook.
Separate data also revealed that China’s services sector expanded less than anticipated in February, indicating ongoing weakness in the economy.
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