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Gold Prices Trim Weekly Gains on Diminished Rate Cut Expectations

Gold prices experienced a slight decline on Friday, shedding some of their weekly gains as remarks from several Federal Reserve officials tempered expectations for interest rate cuts.

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Throughout the week, the yellow metal had surged to nearly $2,400 an ounce in response to softer U.S. economic data. However, it retreated from these levels on Thursday and Friday.

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Spot gold held steady at $2,377.40 an ounce, while gold futures expiring in June edged slightly lower to $2,381.10 an ounce by 00:19 ET (04:19 GMT).

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The decline in gold prices followed cautionary statements from Fed officials against immediate interest rate reductions. Members of the central bank’s rate-setting committee emphasized the need for more convincing evidence of declining inflation beyond the marginally soft April inflation reading.

Consequently, traders began to recalibrate their expectations for a rate cut in September, leading to a rebound in the dollar and U.S. Treasury yields from earlier losses in the week.

Despite the pullback, softer-than-expected consumer price index readings positioned gold for a 0.7% weekly gain. Additionally, the yellow metal remained within striking distance of its record high above $2,430 an ounce, although reaching this level in the near term appeared unlikely.

Meanwhile, other precious metals retreated on Friday but were on track for significant weekly gains. Platinum futures declined by 0.2% but were poised for a 6.2% increase for the week, while silver futures fell by 0.4% yet remained up by 4.5% for the week.

In the realm of industrial metals, one-month copper futures witnessed a decline from two-year highs amid mixed economic data. However, three-month copper futures advanced, driven by expectations of tightened supplies and an eventual demand recovery in the coming months.

Three-month copper futures on the London Metal Exchange rose by 0.6% to $10,445.0 a ton, while one-month copper futures increased by 0.3% to $4.8935 a pound.

The economic data from China portrayed a nuanced outlook, with industrial production surpassing expectations, while retail sales growth slowed and house prices experienced accelerated declines. Despite this mixed picture, markets remained optimistic about a demand rebound, particularly as China implemented additional stimulus measures to bolster growth.

Three-month copper futures surged by nearly 4% for the week, reaching two-year highs, fueled by prospects of demand recovery amid tightening supplies.

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