Gold Steadies Above $2,300 Amid Rate Jitters

Gold prices stabilized in Asian trading on Thursday, rebounding above a crucial support level, yet momentum remained subdued due to ongoing expectations of prolonged higher U.S. interest rates.

Overnight, the yellow metal rebounded as the Federal Reserve dampened expectations for additional interest rate hikes, leading to a decline in the dollar and providing some respite to commodity prices.

Despite this, the Fed indicated it wasn’t rushing to initiate interest rate cuts, a trend that is anticipated to cap significant gains in gold.

Spot gold stabilized at $2,319.98 per ounce after dropping below $2,300 earlier in the week, while gold futures expiring in June remained around $2,329.0 per ounce as of 00:36 ET (04:36 GMT).

The Federal Reserve sends mixed signals, focus shifts to nonfarm payrolls

Fed holds interest rates steady as anticipated.

Fed Chair Jerome Powell’s post-meeting remarks send mixed signals on rate trajectory.

Powell’s remarks delineated a nuanced stance from the Fed regarding interest rates. He highlighted that the persisting disinflation, notably in inflation edging towards the Fed’s 2% target, didn’t offer sufficient conviction for initiating early interest rate cuts. However, Powell also clarified that the Fed didn’t intend to pursue further rate hikes.

While indicating a lack of confidence in initiating early interest rate cuts due to stagnating disinflation, particularly concerning inflation nearing the Fed’s 2% target, the Federal Reserve’s remarks underscored no immediate plans for further rate hikes.

The latter statement spurred some weakness in the dollar, retracting it from its near six-month highs. This shift provided some respite to metal prices, which had been grappling with significant losses in anticipation of the Fed meeting.

Indeed, the expectation of sustained high U.S. interest rates casts a shadow over the outlook for gold prices, particularly as the metal’s safe-haven appeal has waned in recent sessions.

On Thursday, other precious metals rebounded after experiencing significant losses earlier in the week. Platinum futures climbed 0.6% to reach $968.30 per ounce, while silver futures increased by 0.3% to $26.825 per ounce.

Copper prices remain stable below two-year highs

Copper prices are holding steady near two-year highs, with uncertainty surrounding U.S. interest rates contributing to a pause in the recent rally of the red metal.

Three-month copper futures on the London Metal Exchange increased by 0.5% to $9,950.0 a ton, while one-month copper futures dipped slightly by 0.1% to $4.5648 a pound.

Both contracts stayed significantly under the two-year peaks reached in April, with market participants eagerly anticipating further signals on economic expansion and demand.

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