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Gold Prices Steady Amid Dollar Softening Prior to CPI Data; Copper Demonstrates Strength

Gold prices remained stable during Asian trading hours on Wednesday, benefiting from a weakened dollar as markets awaited pivotal U.S. consumer inflation data that is anticipated to influence interest rate projections.

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In the realm of industrial metals, copper prices surged to levels not seen in over two years, driven by the possibility of constrained supplies and fiscal stimulus in China, the largest importer.

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The price of gold experienced overnight gains following remarks from Federal Reserve Chair Jerome Powell, indicating a halt in further U.S. rate hikes. Powell’s statements were instrumental in the decline of the dollar.

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Spot gold held firm at $2,357.65 per ounce, while June gold futures edged up 0.1% to $2,361.90 per ounce by 00:50 ET (04:50 GMT).

All eyes turned to the consumer price index (CPI) data for April, especially after the producer price index (PPI) data released earlier exhibited an unexpected increase. The robust PPI reading raised concerns that persistent inflation might dissuade any prospective interest rate reductions this year. A robust CPI reading could exacerbate these apprehensions.

Although Powell’s assertions, particularly regarding the adequacy of monetary policy, assuaged market fears of heightened rates, the Fed Chair cautioned that the central bank required considerably more assurance that inflation would regress to its annual target of 2%.

This circumstance suggests that the Fed is inclined to maintain elevated rates for a prolonged duration, which could unfavorably affect metal prices as high rates elevate the opportunity cost of investing in precious metals.

On Wednesday, other precious metals also made gains, capitalizing on the weakened dollar. Platinum futures inched up to $1,065.85 per ounce, while silver futures rose 0.2% to $28.767 per ounce.

In the copper market, three-month futures on the London Metal Exchange climbed 0.6% to $10,145.0 per ton, while one-month futures steadied at $5.0137 per pound. Both contracts reached their highest levels since April 2022, after China, the leading importer, announced plans for a substantial 1 trillion yuan ($138 billion) bond issuance aimed at bolstering economic growth.

Copper prices have been on an upward trajectory over the past two months, buoyed by the anticipation of reduced supplies following Russian metal sanctions and refinery cuts in China.

This week, attention is directed toward industrial production and retail sales figures from China, scheduled for release on Friday.

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