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Gold Prices Hold Steady Amid Dollar Softening Amid Inflation Watch

Gold prices maintained stability in Asian trading on Tuesday, finding some relief from a slightly weaker dollar as traders anticipated a series of significant inflation reports this week, notably from the U.S.

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The precious metal recovered some ground from last week’s losses but remained notably below recent record highs, as diminishing safe-haven demand and growing concerns about elevated U.S. interest rates prompted traders to shift focus towards the dollar and Treasuries.

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However, the greenback experienced a minor dip in low-volume trading due to the Memorial Day holiday observed on Monday.

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At 23:51 ET (03:1 GMT), spot gold remained steady at $2,351.03 per ounce, while gold futures expiring in June steadied at $2,352.10 per ounce. Spot gold had reached a record high of approximately $2,450 per ounce last week.

Traders maintained caution regarding the outlook for gold ahead of the release of key Personal Consumption Expenditures (PCE) price index data scheduled for this Friday. This data serves as the Federal Reserve’s preferred inflation metric and is expected to influence the trajectory of interest rate adjustments.

The anticipation of the PCE data follows remarks from several Fed officials warning that persistent inflationary pressures could delay potential rate cuts this year. Consequently, traders have begun to factor in a higher likelihood of the Fed maintaining rates in September, in contrast to previous expectations of a 25 basis point cut.

This shift in sentiment contributed to pulling gold prices off their record highs last week as traders increasingly favored the greenback.

Ahead of Friday’s PCE data, inflation readings from Australia, Japan, and Germany are also on the agenda for this week.

In the realm of other precious metals, platinum futures rose by 0.2% to $1,066.95 per ounce, while silver futures increased by 0.3% to $31.950 per ounce.

Turning to industrial metals, copper prices advanced against a softer dollar, with attention now focused on upcoming data from China, the top importer. Benchmark copper futures on the London Metal Exchange surged by nearly 2% to $10,532.50 per tonne, while one-month copper futures rose by 0.3% to $4.8244 per pound.

Both copper contracts remained below recent record highs but had accrued substantial gains throughout May, driven by speculative fervor fueled by expectations of robust copper demand and constrained supplies.

This week, investors are eagerly awaiting key Purchasing Managers Index (PMI) data from China, scheduled for release this Friday, to glean further insights into business activity in the world’s largest copper importer.

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