In Asian trading on Tuesday, gold prices experienced a slight increase, recovering somewhat from significant losses in the previous session. Investors maintained their focus on upcoming U.S. inflation data, seeking further guidance on potential interest rate movements.
Despite showing some strength in the previous week, gold remained below the record highs reached in April. Traders continued to favor the dollar amid concerns about prolonged high U.S. rates.
Spot gold saw a 0.3% rise to $2,343.60 per ounce, while gold futures expiring in June increased by 0.3% to $2,349.05 per ounce by 00:22 ET (04:22 GMT).
Investors awaited the release of the U.S. producer price index data later on Tuesday, with the more significant consumer price index reading scheduled for Wednesday. These readings are expected to influence the outlook for U.S. interest rates, especially after strong inflation readings in the first quarter led to a reduction in market expectations for interest rate cuts this year.
While elevated U.S. rates pose challenges for gold, the precious metal benefited from increased demand for safe-haven assets amid heightened geopolitical tensions in the Middle East. However, some easing of tensions, particularly between Iran and Israel, left gold susceptible to pressure from interest rates.
The prospect of sustained high interest rates is unfavorable for gold as it raises the opportunity cost of holding the precious metal.
Meanwhile, other precious metals also saw gains on Tuesday. Platinum futures rose 0.1% to $1,011.05 per ounce, while silver futures increased by 0.9% to $28.688 per ounce.
In the realm of industrial metals, copper prices surged to two-month highs as traders welcomed news from China regarding a substantial bond issuance of 1 trillion yuan ($138 billion). This issuance, which will include bonds with maturities ranging from 20 to 40 years, is intended to support infrastructure spending and bolster economic recovery efforts in China.
The positive outlook for copper demand contributed to the increase in prices. Three-month copper futures on the London Metal Exchange climbed 0.2% to $10,227.0 per ton, while one-month copper futures rose by 0.5% to $4.7940 per pound. Both contracts reached their highest levels since April 2022.
Despite concerns over China’s property market, including another major developer defaulting on bond payments, news of the significant bond issuance helped offset negative sentiment surrounding the property sector.