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Gold prices inched up in Asian trading on Tuesday, recovering from recent losses as market attention remained fixed on the impending release of US inflation data, which could provide further insights into the trajectory of interest rates.
Despite showing some strength last week, gold remained below its record levels reached in April, as traders maintained a bias towards the dollar amid concerns of prolonged increases in US interest rates.
The spot price of gold edged up by 0.3% to $2,343.60 per ounce, while gold futures contracts expiring in June also rose by 0.3% to $2,349.05 per ounce by 00:22 ET (04:22 GMT).
Awaiting further cues for price movements are the upcoming US Producer Price Index (PPI) data scheduled for release later on Tuesday, followed by the highly anticipated Consumer Price Index (CPI) reading on Wednesday. These figures are expected to influence market sentiment regarding future interest rate adjustments.
While elevated interest rates pose challenges for gold prices, the precious metal has found support from increased safe-haven demand amidst escalating geopolitical tensions in the Middle East. However, a recent easing of tensions, particularly between Iran and Israel, has left gold vulnerable to interest rate pressures.
Long-term high interest rates diminish the attractiveness of gold as an investment, as they raise the opportunity cost of holding the precious metal.
In addition to gold, other precious metals also saw gains on Tuesday. Platinum futures rose by 0.1% to $1,011.05 per ounce, while silver futures climbed by 0.9% to $28.688 per ounce.
Copper Prices Reach Two-Year Highs Despite Concerns in Chinese Real Estate Market
Meanwhile, copper prices surged to their highest levels in two months on Tuesday, buoyed by positive news from China regarding a substantial bond issuance aimed at stimulating economic growth.
Chinese authorities announced plans to issue bonds worth 1 trillion yuan ($138 billion) with maturities ranging from 20 to 40 years, beginning this week. This issuance is intended to bolster infrastructure spending and facilitate economic recovery in the country.
The optimistic outlook for copper demand stemming from this development offset concerns in China’s real estate market, where another major developer defaulted on its bonds. Three-month copper futures on the London Metal Exchange rose by 0.2% to $10,227.0 per ton, while one-month copper futures climbed by 0.5% to $4.7940 per pound. Both contracts reached their highest levels since April 2022.
