Gold Steadies Amid Rate Jitters; Copper Stabilizes After Record Highs

Gold Prices Steady in Asian Trade

Gold prices steadied in Asian trade on Friday, but the yellow metal was nursing steep weekly declines due to persistent concerns over prolonged high U.S. interest rates. Spot gold rose 0.2% to $2,332.77 an ounce, while gold futures for June delivery fell 0.1% to $2,333.85 an ounce by 00:37 ET (04:37 GMT).

Weekly Performance and Factors

Gold was set to lose about 3.4% this week, dropping from record highs reached at the beginning of the week. The decline was driven by:

1. Rate Jitters: Hawkish signals from the Federal Reserve highlighted policymakers’ increasing concerns over persistent inflation. Although further rate hikes seem unlikely, the Fed’s hawkish tone has led traders to scale back expectations for any rate cuts in 2024. The CME Fedwatch tool indicated a nearly equal probability of a rate cut or hold in September.
2. Safe Haven Demand: The death of the Iranian President did not escalate Middle East tensions as initially expected, leading to waning safe haven demand for gold.
3. High for Longer Rates: Elevated interest rates increase the opportunity cost of holding non-yielding assets like gold, putting downward pressure on its price.

Other Precious Metals

Other precious metals also steadied on Friday but were set for weekly losses. Platinum futures rose 0.4% to $1,029.90 an ounce, while silver futures increased 0.4% to $30.582 an ounce.

Industrial Metals: Copper Performance

Copper Prices Stabilize

Benchmark copper futures on the London Metal Exchange rose 0.8% to $10,450.50 a ton, while one-month U.S. copper futures increased 0.7% to $4.8102 a pound. Despite these gains, both contracts experienced significant declines from record highs earlier in the week.

Factors Influencing Copper Prices

1. Speculative Frenzy: The earlier surge in copper prices was driven by speculative trading, which appears to be winding down.
2. Physical Deliveries: Traders are now focusing on whether physical deliveries on contracts can be made in time, which will provide more insight into copper supply conditions.
3. China’s Economic Sentiment: Sentiment towards top copper importer China has cooled. Optimism over potential stimulus measures was countered by ongoing trade tensions with the U.S. and geopolitical issues involving Taiwan.

Conclusion

The market dynamics for both precious and industrial metals are currently influenced by concerns over high interest rates, geopolitical developments, and economic signals from major economies. While gold and other precious metals are facing downward pressure from rate concerns, industrial metals like copper are experiencing stabilization after speculative-driven highs. Traders and investors continue to monitor central bank signals, geopolitical events, and economic data to navigate these markets.