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Gold Sees Little Love from Rate Cut Expectations; Copper Struggles Amid Mixed Data

Gold Prices Fall Amid Rate Cut Speculation and Geopolitical Calm

Gold prices declined in Asian trading on Monday as investors gravitated towards riskier assets, driven by heightened expectations of interest rate cuts. This shift left the yellow metal largely overlooked, despite a weakening dollar.

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Spot gold dropped by 0.3% to $2,321.51 per ounce, while gold futures for August delivery decreased by 0.2% to $2,341.55 per ounce as of 00:31 ET (04:31 GMT).

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The retreat in gold prices was further exacerbated by diminishing safe-haven demand following reports that Israel and Hamas were nearing a U.S.-brokered ceasefire agreement, potentially easing geopolitical tensions in the Middle East.

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Rate Cut Speculation Boosts Risk Assets, Pressures Gold

The losses in gold came as traders moved towards more risk-driven assets, spurred by recent data indicating a cooling in U.S. inflation. Asian stocks surged on Monday, reflecting this trend.

The PCE price index data, which the Federal Reserve favors as an inflation gauge, showed an expected easing in April. This bolstered expectations that the Fed might start cutting rates in September, with the CME FedWatch tool indicating a higher probability of a 25 basis point rate cut. However, this expectation will face scrutiny with the upcoming nonfarm payrolls data due on Friday and a Fed meeting next week.

Anticipated rate cuts by the European Central Bank and the Bank of Canada at their meetings this week provided little support to gold prices.

Mixed Performance Among Other Precious Metals

Other precious metals exhibited mixed performance on Monday. Platinum futures rose by 0.3% to $1,046.60 per ounce, whereas silver futures fell by 0.2% to $30.37 per ounce. Both metals had outperformed gold in recent weeks.

Copper Prices Struggle Amid Mixed Economic Signals from China

Benchmark copper futures on the London Metal Exchange remained steady at $10,093.50 per tonne, while one-month copper futures fell by 0.2% to $4.6160 per pound. Both contracts have plummeted from recent record highs, as the speculative frenzy that drove a copper rally through April and early May subsided.

The mixed economic data from China further clouded the demand outlook for copper. Private PMI data on Monday indicated that China’s manufacturing sector grew more than expected in May. However, this contrasted with government PMI data from last week, which showed that the manufacturing sector had contracted in May.

The conflicting signals from China, the world’s largest copper importer, have led to uncertainty regarding the future demand for the red metal.

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