Gold prices remained relatively unchanged during Asian trading hours on Friday amidst concerns sparked by stronger-than-expected inflation data. Investors are wary that the Federal Reserve might indicate a prolonged period of higher interest rates in the upcoming meeting.
Copper Prices Rally Amid Expectations of Tighter Chinese Supplies
Contrary to gold, copper prices experienced a significant surge, reaching new 11-month highs on Friday. This rally was largely fueled by expectations of substantially reduced Chinese copper supplies, prompting considerable buying activity in the market.
Dollar Strength Weighs on Bullion Prices
Meanwhile, bullion prices faced downward pressure due to a strengthening dollar. The greenback reached its highest level in over a week following robust inflation figures earlier in the week. Traders also adjusted their positions in anticipation of the impending Federal Reserve meeting.
Gold Sees Modest Increase Despite Dollar's Strength
Spot gold saw a marginal increase of 0.1% to $2,163.98 per ounce, while gold futures for April delivery stabilized at $2,168.05 per ounce by 01:17 ET (05:17 GMT).
Gold Faces Decline from Record Highs Ahead of Fed Meeting
Gold prices are poised for weekly losses after a sharp decline from record highs achieved earlier in the week. The decline was primarily attributed to growing concerns surrounding the upcoming Federal Reserve meeting, particularly in light of consistently strong consumer and producer inflation signals.
Inflation Fears Heighten Ahead of Fed Meeting
Persistent inflation worries have led traders to brace themselves for any potentially hawkish signals from the Federal Reserve. The central bank's indication that its decisions regarding interest rate adjustments in 2024 will be heavily influenced by inflationary trends has further fueled apprehensions. A prolonged period of higher interest rates would unfavorably impact gold and other non-yielding assets.
Optimism Remains for Gold in the Long Term
Despite short-term weakness, analysts at ANZ remain optimistic about gold's prospects for the remainder of the year. They have revised their 2024 target price for gold upward to $2,300 per ounce from $2,200 per ounce, citing various factors supporting the precious metal.
Other Precious Metals Show Strength
In contrast to gold, other precious metals demonstrated resilience and were poised to outperform gold for the week. Platinum futures rose by 0.2% to $932.50 per ounce, while silver futures increased by 0.6% to $25.212 per ounce.
Copper Prices Soar on Reports of Supply Shortage in China
Copper futures on the London Metal Exchange experienced a significant surge, climbing 1.5% on Friday and surpassing the $9,000 per ton mark for the first time since April 2023. Similarly, one-month U.S. copper futures surged by 1.3% to $4.1022 per pound, reaching an 11-month high.
Bullish Outlook for Copper Continues
Reports suggesting potential joint production cuts among major Chinese copper smelters have fueled further optimism in the copper market. Analysts at Citi maintain an overweight stance on copper, projecting a potential upside of up to $9,500 per ton by June 2024.