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Gold Prices Inch Upward Following Weekly Losses; Inflation Remains in Focus

Gold prices saw a slight increase in Asian trading on Monday, reclaiming some of the losses incurred last week as traders exercised caution amidst anticipation of a crucial U.S. inflation report.

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Broader trading activity remained subdued due to holidays observed in both the UK and the U.S., while the prospect of further indications on U.S. interest rates deterred significant market movements. In the realm of industrial metals, copper prices also experienced a rebound after a recent decline from record highs.

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Spot gold rose by 0.4% to reach $2,343.23 an ounce, while gold futures expiring in June saw a similar increase of 0.4% to hit $2,344.10 an ounce by 00:33 ET (04:33 GMT). Spot prices, however, were still recovering from recent declines following their peak.

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The primary focus of the week remained on the upcoming release of the Personal Consumption Expenditures (PCE) price index data, which serves as the Federal Reserve’s preferred measure of inflation. Scheduled for Friday, this data release follows a series of warnings from Fed officials regarding persistent inflationary pressures, leading traders to recalibrate their expectations for potential rate cuts by the central bank this year. Market sentiment now leans towards a higher likelihood of the Fed maintaining rates unchanged in September, a departure from previous expectations of a rate cut during that time period, as indicated by the CME Fedwatch tool.

This shift in sentiment has exerted downward pressure on gold and other metal prices in recent weeks, with traders displaying a growing preference for the dollar and Treasury securities, thereby reducing the safe-haven appeal of gold.

In addition to gold, other precious metals also saw gains on Monday, recovering from losses incurred last week. Platinum futures rose by 1.2% to reach $1,048.70 an ounce, while silver futures experienced a 1.7% increase to reach $31.023 an ounce.

Copper prices, which witnessed a speculative surge leading to record highs in May, remained steady with a 0.3% rise in one-month copper futures to $4.7720 a pound. Attention now turns to the physical copper markets to ascertain whether they are as tight as initially speculated, and whether the supply will remain stable in the coming months. Furthermore, market participants are keenly awaiting signals from China, the top copper importer, particularly regarding the funding and implementation of recently announced stimulus measures.

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