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Gold Prices Stabilize Below $2,400 Amid Lingering Rate Concerns and Dollar Strength

Gold prices regained ground in Asian trading on Thursday, recovering from overnight losses but remaining below recent peaks as apprehensions surrounding higher interest rates and pressure from a resilient dollar persisted.

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The precious metal had soared to record highs last week amidst heightened safe-haven demand following Iran’s strike against Israel. However, some relief emerged this week as Israel refrained from immediate retaliation, alleviating concerns of an escalated conflict.

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Despite a slight retreat in the dollar from over five-month highs on Wednesday, gold failed to capitalize on this weakness due to lingering fears of prolonged higher interest rates.

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Spot gold climbed 0.6% to $2,374.31 an ounce, while gold futures for June delivery edged up to $2,389.05 an ounce. Wednesday witnessed a 0.9% decline in spot prices, reflecting profit-taking after reaching record highs of over $2,340 an ounce last week.

Although gold experienced significant profit-taking amid record highs, its 14-day relative strength index suggested that it remained in overbought territory. However, nearing a return to neutral territory below 70 points could potentially pave the way for further gains in the near term.

Nevertheless, the outlook for gold remains uncertain amidst expectations of sustained higher U.S. interest rates. Strong inflation figures and hawkish signals from the Federal Reserve led traders to discount the likelihood of a June rate cut by the central bank.

Elsewhere in the precious metals market, platinum futures declined by 0.3% to $949.60 an ounce, while silver futures inched up by 0.2% to $28.465 an ounce.

In the industrial metals sector, copper and aluminum prices advanced on Thursday, benefiting from a softer dollar and optimistic views regarding U.S. economic resilience supporting metal demand. Three-month copper futures on the London Metal Exchange rose by 0.4% to $9,591 a ton, nearing a two-year high, while aluminum futures climbed by 0.6% to $2,589.0 a ton.

Industrial metal prices have rallied recently on expectations of tightened supplies, driven by stricter sanctions on Russian metal exports imposed by the U.S. and its allies. Additionally, copper prices received a boost from major Chinese smelters signaling a reduction in production, further supporting market sentiment.

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