Tuesday, June 25, 2024

Gold Drops Amid Rate Cut Expectations; Copper Prices Falter

Gold prices dipped in Asian trading on Monday, as increased expectations of rate cuts drove investors toward riskier assets, despite a weaker dollar.

In the industrial metals sector, copper prices also declined, influenced by mixed purchasing managers index (PMI) data from China and a cooling of speculative buying that had initially boosted the metal’s prices.

Gold’s appeal as a safe haven diminished following reports suggesting that Israel and Hamas were nearing a U.S.-brokered ceasefire agreement, potentially easing geopolitical tensions in the Middle East.

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

Gold Retreats as Rate Cut Speculation Boosts Stocks

The decline in gold prices came as traders shifted to riskier assets, encouraged by data indicating some cooling in U.S. inflation. Asian stock markets surged on Monday.

Data released on Friday showed the Personal Consumption
Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, eased as expected in April. This bolstered bets that the Fed might start cutting rates in September, with the CME Fedwatch tool indicating a higher likelihood of a 25 basis point rate cut.

This expectation will be tested in the coming days with the release of nonfarm payrolls data on Friday and a Fed meeting next week.

Anticipated rate cuts by the European Central Bank and the Bank of Canada in their respective meetings this week also did little to support gold prices.

Other precious metals showed mixed performance on Monday. Platinum futures rose 0.3% to $1,046.60 an ounce, while silver futures fell 0.2% to $30.37 an ounce.

Copper Prices Struggle Amid Mixed Signals from China

Benchmark copper futures on the London Metal Exchange remained steady at $10,093.50 per tonne, while one-month copper futures declined 0.2% to $4.6160 per pound.

Both contracts dropped from recent record highs as speculative buying that had driven a rally through April and early May subsided.

Mixed economic data from China added to doubts about demand for copper. Private PMI data on Monday showed China’s manufacturing sector grew more than expected in May, contrasting with government PMI data from last week that indicated a contraction in the sector.

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