Gold Prices Hold Steady as Traders Brace for Key Inflation Data

Gold prices steadied in Asian trade on Tuesday, finding some relief from a slightly weaker dollar as traders prepared for key inflation readings, particularly from the U.S. The yellow metal managed to recover some of last week’s losses, but still remained below recent record highs due to decreased safe haven demand and concerns about high U.S. interest rates, prompting traders to shift towards the dollar and Treasuries.

Despite the Memorial Day holiday on Monday leading to low-volume trade, the greenback saw a slight decline. Spot gold held steady at $2,351.03 an ounce, while gold futures expiring in June were at $2,352.10 an ounce by 23:51 ET (03:1 GMT). Spot gold had reached a record high of around $2,450 an ounce last week.

Traders remained cautious about gold ahead of the release of the PCE price index data on Friday, which is the Federal Reserve’s preferred inflation measure and could impact the outlook for interest rate adjustments. Recent warnings from Fed officials about persistent inflation delaying potential rate cuts this year led to a shift in market expectations, with a greater likelihood of the Fed maintaining rates in September rather than cutting by 25 basis points.

Inflation data from Australia, Japan, and Germany are also scheduled for release this week, adding to the anticipation surrounding the PCE data. Other precious metals saw slight gains on Tuesday, with platinum futures up 0.2% to $1,066.95 an ounce and silver futures rising 0.3% to $31.950 an ounce.

Meanwhile, copper prices advanced amid a weaker dollar, with focus shifting to upcoming data from China, the top importer of the metal. Benchmark copper futures on the London Metal Exchange surged nearly 2% to $10,532.50 a tonne, while one-month copper futures rose 0.3% to $4.8244 a pound. Despite remaining below recent highs, both contracts had strong gains in May fueled by expectations of robust demand and limited supplies.

Investors are eagerly awaiting key purchasing managers index data from China on Friday for further insights into business activity in the largest copper importer globally. The data is expected to provide more cues on the trajectory of copper prices in the coming weeks.

In conclusion, the stability in gold prices amid inflation concerns and the advance in copper prices on expectations of strong demand highlight the ongoing market dynamics. Traders are closely monitoring key economic indicators and central bank policies for signals on future price movements in the precious metals and industrial metals sectors.