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Gold prices retreated in Asian trade on Tuesday, remaining within a narrow band around the low $2,300s as a resilient dollar and anticipation of key U.S. inflation data dampened investor appetite for the precious metal.
Despite a slight overnight dip in the dollar, the greenback held its ground, buoyed by uncertainty surrounding U.S. interest rates. Spot gold fell 0.4% to $2,325.56 an ounce, while gold futures dipped 0.3% to $2,337.35 an ounce.
The yellow metal has been confined to a tight trading range around the low $2,300s over the past week, as traders grapple with conflicting signals about the likelihood of U.S. interest rate cuts this year. While recent inflation data showed some moderation, price pressures remain elevated. Additionally, unexpectedly strong purchasing managers index data for June raised concerns that the robust U.S. economy could delay any potential rate cuts.
Investors are now eagerly awaiting the release of the PCE price index, the Federal Reserve’s preferred inflation gauge, on Friday. The data is expected to reveal a slight cooling in inflation but still well above the central bank’s 2% annual target.
High interest rates typically weigh on gold prices, as they increase the opportunity cost of holding the non-yielding asset. Other precious metals also saw mixed performance on Tuesday, remaining within recent trading ranges. Platinum futures edged up 0.4% to $1,016.55 an ounce, while silver futures dipped 0.1% to $29.817 an ounce.
In the industrial metals market, copper prices rebounded slightly on Tuesday, but sentiment remained fragile due to concerns over China, the top consumer of the red metal. Beijing has hinted at a potential trade war with the European Union and the U.S. over steep import duties on Chinese electric vehicles, adding to the existing uncertainties in the market.
Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,703.50 a tonne, while one-month copper futures climbed 0.5% to $4.4413 a pound. Both contracts have experienced sharp declines in recent weeks as concerns about China’s economic outlook and doubts about a global economic recovery weighed on sentiment.
Overall, the precious metals and industrial metals markets remain sensitive to developments in the global economy, particularly the trajectory of U.S. interest rates and the ongoing trade tensions between major economies. Investors will be closely watching the upcoming inflation data and geopolitical developments for further cues.
