Market Analysis

Gold prices remained within a narrow range during Asian trading on Wednesday, as a previous rebound was hindered by the strength of the dollar ahead of upcoming indicators related to inflation and interest rates.

The price of gold fell sharply from its recent record highs over the last couple of weeks due to indications from other significant central banks, which favored the dollar. The dollar index saw a slight increase in Asian trading, nearing a one-month peak.

Spot gold held steady at $2,179.98 per ounce, while gold futures for April delivery saw a slight uptick to $2,178.60 per ounce at 00:25 ET (04:25 GMT).

Despite some gains in overnight trading, gold prices struggled to sustain upward momentum due to the persistent strength of the dollar. Traders continued to favor the dollar following dovish signals from the Swiss National Bank and the Bank of England, which positioned the greenback as the primary high-yielding, low-risk currency.

Anticipation surrounding the release of crucial PCE price index data, the preferred inflation metric for the Federal Reserve, along with remarks from key Fed officials later in the week, contributed to increased flows into the dollar as traders awaited further signals regarding U.S. interest rate adjustments.

However, market expectations suggest that the Fed will likely only begin implementing rate cuts starting from June, limiting the immediate upside potential for gold. Nonetheless, gold is anticipated to benefit from lower interest rates towards the end of the year.

In the realm of other precious metals, platinum futures saw a modest rise of 0.1% to $918.50 per ounce, while silver futures experienced a slight decline of 0.2% to $24.573 per ounce.

Meanwhile, copper prices continued to retreat from 11-month highs on Wednesday due to prevailing concerns about the outlook for demand in China, the top importer of the metal.

Three-month copper futures on the London Metal Exchange declined by 0.4% to $8,836.00 per ton, while one-month U.S. copper futures dropped by 0.3% to $3.9932 per pound.

Recent data indicated a 10.2% increase in Chinese industrial profits during the first two months of 2024. However, much of this growth was attributed to a lower comparison base from the previous year.

Optimism regarding Chinese demand for copper waned in recent sessions as inventory figures revealed robust stockpiles in China for the early part of 2024. This offset hopes of a potential supply shock in the copper market, despite indications from several major Chinese refiners about plans to scale back production.

Paraphrasing text from "Investing" all rights reserved by the original author.