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Gold Prices Retreat Amid Fed Rate Jitters; Copper Falls as Speculative Frenzy Cools

In Asian trading on Wednesday, gold prices experienced a decline, moving further away from recent record highs as concerns regarding elevated U.S. interest rates intensified ahead of potential cues from the Federal Reserve.


Industrial metals also faced losses, with copper prices retracting from recent record highs as a speculative surge in the red metal subsided, awaiting more information on physical supply and overall demand.


Additionally, a stable dollar contributed to the downward pressure on metal prices, while the safe haven appeal of gold diminished amid limited signs of deteriorating geopolitical conditions in the Middle East, following the tragic helicopter crash involving the Iranian President.


Spot gold dipped by 0.2% to $2,415.61 an ounce, while June gold futures slid by 0.3% to $2,418.75 an ounce by 00:23 ET (04:23 GMT). Despite the decline, spot prices remained within sight of their recent peak at $2,450.06 an ounce.

The focus shifted to the upcoming release of the minutes from the Fed’s late-April meeting, expected later on Wednesday, for further insights into the central bank’s stance. Traders are keen to discern whether rate cuts are being considered, especially amid persistent inflation concerns expressed by Fed officials.

Rate hikes pose a challenge for gold, as they elevate the opportunity cost of holding the precious metal. While gold surged to record highs earlier in the week due to increased safe haven demand, the absence of significant escalations in the Middle East left it susceptible to rate-related pressures.

Other precious metals also saw declines, with platinum futures dropping by 0.4% to $1,058.35 an ounce, and silver futures falling by 0.4% to $31.950 an ounce.

Meanwhile, copper prices retreated as well. Benchmark copper futures on the London Metal Exchange fell by 0.9% to $10,730.0 a ton, while one-month U.S. copper futures declined by 0.8% to $5.0595 a pound. Both contracts moved further away from the record highs reached earlier in the week.

The recent surge in copper prices, fueled by speculative activity, appeared to have paused, awaiting confirmation on whether physical copper supplies could meet demand. Additionally, diminished optimism over China, the largest copper importer globally, contributed to the pullback, as traders monitored the implementation of Beijing’s recently outlined stimulus measures.