Gold prices remained relatively unchanged on Wednesday following a three-day decline, with investors eagerly anticipating signals from the conclusion of the Federal Reserve meeting later in the day. In contrast, copper prices experienced a boost due to an interest rate reduction in China.
On Tuesday, soft U.S. inflation data prompted a rally in most risk-driven markets, as easing inflation could potentially lead the Federal Reserve to adopt a more accommodative approach.
Global market risk appetite also increased after China implemented its first interest rate cut in ten months, aiming to strengthen its slowing economic recovery.
However, the heightened risk appetite diminished the appeal of safe-haven assets like gold and the dollar, causing the yellow metal to trade within a narrow range.
Amidst the uncertainty surrounding the economy and monetary policy, spot gold steadied at $1,943.82 per ounce, while gold futures dipped 0.1% to $1,957.00 per ounce by 20:00 ET (00:00 GMT). These figures represent a decline of approximately 1% over the past three sessions, mainly driven by Tuesday’s losses.
Gold has been confined within a tight range of $1,930 to $2,000 over the past three weeks, reflecting increased market uncertainty. The outcome of the Fed meeting later in the day is expected to provide further indications for the future movement of the precious metal.
Although a pause in future rate hikes could be favorable for gold, the yellow metal may face mounting pressure as this development fuels risk appetite. Analysts have cautioned that the Federal Reserve might still decide to raise interest rates, considering that U.S. inflation remains well above the central bank’s target range of 2%.
Irrespective of the Fed’s decision, U.S. interest rates are projected to remain higher for a prolonged period, which imposes a limit on any upward potential for gold this year.
Meanwhile, copper prices surged near a one-month high on Wednesday following China’s interest rate cut, which raised expectations for a recovery in demand within the major importing nation.
Copper futures held steady at $3.8282 per pound after a 2% rally during the preceding session.
The People’s Bank of China reduced its short-term lending rates on Tuesday, marking its first cut since August 2022. This move aims to further loosen the country’s monetary policy and bolster its economic recovery, which has been facing deceleration.
The rate cut instilled hope for an upturn in copper demand driven by China throughout the year. Consequently, prices for the red metal rebounded after weak economic indicators from China had pushed them to six-month lows in May.
___
Please continue to read new articles here about merchandise assessed by Waytrade.
