Overview of Gold Market
On Thursday, gold traded nearly unchanged at around $3,333 per ounce, while US gold futures advanced 0.2% to $3,348.
Investors shifted their focus towards upcoming US inflation data, seeking insights into interest rate expectations, and events in the Middle East where geopolitical tensions have eased.
Impact of US Inflation Data
Markets anticipate two interest rate cuts totaling 50 basis points by year-end, starting in September. Investors are now keenly watching Friday’s personal consumption expenditures (PCE) data for further clues on the Federal Reserve’s monetary policy trajectory.
Gold is considered a hedge against inflation and economic uncertainty, but its appeal wanes in high-interest-rate environments as it doesn’t offer returns.
Performance of Other Metals
- Palladium: Soared over 8% to $1,136.68, its highest level since late October 2024.
- Platinum: Gained 5.1% to $1,423.26, its highest level since September 2014.
- Silver: Spot silver advanced 1% to $36.63, its highest level since June 18.
Copper Gains 2%
Copper prices reached their highest level in nearly three months on Thursday, driven by a weakening US dollar, concerns over supply, and speculative buying following the breakout of key technical levels.
The three-month copper contract on the London Metal Exchange (LME) climbed 1.9% to $9,896.50 per tonne, its highest level since March 27.
“The key for us is the weakness in the US dollar, which tends to decline, favoring our sector,” said Alastair Munro, metals strategist at Marex.
The US dollar index plummeted to its lowest level since early 2022, as concerns over the future independence of the Fed eroded confidence in the country’s monetary policy.
A weaker US dollar makes commodities priced in the currency less expensive for buyers using other currencies.
The premium of the LME cash copper contract over the three-month contract surged to $310 per tonne, its highest level since November 2021, from $101 the previous day.
While traders expect deliveries to LME warehouses to ease supply pressures, these have yet to materialize.
The rise in US copper prices is based on expectations that US tariffs on the industrial metal will be imposed, triggering an influx of product into Comex warehouses.
Key Questions and Answers
- What is the current status of gold prices? Gold traded nearly unchanged at around $3,333 per ounce, while US gold futures advanced 0.2% to $3,348.
- Why are investors focusing on US inflation data? Investors seek insights into interest rate expectations and are monitoring upcoming US inflation data.
- How have other metals performed? Palladium soared over 8%, platinum gained 5.1%, and silver advanced 1%.
- What drove the increase in copper prices? Weakening US dollar, supply concerns, and speculative buying following the breakout of key technical levels.
- Why is the US dollar index falling? Concerns over the future independence of the Fed have eroded confidence in US monetary policy.
