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Gold prices remained largely flat in Asian trading on Monday, reeling from last week’s losses as concerns about high U.S. interest rates intensified ahead of a Federal Reserve meeting and crucial inflation data this week.
The precious metal retreated from near-record highs following Friday’s stronger-than-expected nonfarm payrolls report, prompting traders to reconsider expectations of a September rate cut.
Spot gold saw a marginal 0.1% increase to $2,295.7 an ounce, while gold futures for August delivery declined 0.6% to $2,312.30 an ounce.
Investors are keenly focused on the upcoming Fed meeting, where a rate decision is due on Wednesday. While the central bank is widely expected to keep rates unchanged, any hints about future policy moves will be closely monitored, especially after recent signs of resilience in U.S. inflation and the labor market.
Several Fed officials have expressed a hawkish stance, emphasizing the need to maintain high rates to combat persistent inflation and labor market strength. The robust nonfarm payrolls data further reinforced this view.
Furthermore, key consumer price index (CPI) inflation data, due later this week, is expected to reveal inflation levels well above the Fed’s 2% annual target in May.
The prospect of delayed rate cuts triggered a sharp decline in gold prices last week, as investors shifted towards the strengthening dollar.
Reports of reduced gold purchases by the People’s Bank of China, a significant buyer of bullion, also contributed to the downward pressure on gold.
Other precious metals experienced a slight recovery on Monday, with platinum futures rising 0.7% to $977.05 an ounce and silver futures increasing 0.9% to $29.690 an ounce.
In the industrial metals market, copper prices struggled with steep losses from last week, influenced by both Fed rate concerns and waning optimism over China’s economic recovery.
Benchmark copper futures on the London Metal Exchange rose 0.2% to $9,779.50 a tonne, while one-month copper futures saw a 0.6% increase to $4.4735 a pound. However, both contracts remained significantly below the record highs reached in May.
Despite optimism over strong demand, fears of high interest rates hindering global economic activity and dampening copper demand have offset any positive sentiment. Mixed economic signals from China, with strong copper import data but overall uncertain economic indicators, have further fueled concerns over the demand outlook.
