Gold prices remained stable on Friday after giving up all their gains earlier this week due to the release of sticky U.S. inflation data, which led to a reassessment of rate cut expectations by the Federal Reserve.
Economic readings from both the U.S. and China, which showed weakness, led to significant losses in copper and other base metals. The market is increasingly worried that the economic slowdown will lower demand for commodities.
Despite this, gold managed to stay above the $2,000 an ounce mark due to the continuing high demand for safe-haven assets. The metal seems to have formed a new support level at this price point due to fears of a U.S. banking crisis, which led investors to put their capital into gold.
Although gold saw significant losses in the prior session, it slightly rose on Friday to $2,016.97 an ounce. Both spot gold and gold futures were trading flat for the week after a sharp reversal on Thursday.
The Producer Price Index (PPI) inflation data for the U.S. released on Thursday prompted a scaling back of expectations for interest rate cuts by the Federal Reserve this year.
This followed a similar pattern to the Consumer Price Index (CPI) data released on Wednesday, which showed that U.S. inflation had eased slightly in April but remained above the Fed’s 2% target.
The Fed Fund futures prices indicate that there is a nearly 92% chance the bank will keep rates steady in June as markets have scaled back their expectations for a rate cut this year.
Other precious metals like platinum and silver also stabilized on Friday after significant losses earlier this week. Platinum and silver futures fell 0.1% and 0.4%, respectively.
Industrial metals showed stability on Friday after steep losses in the previous sessions, as disappointing Chinese inflation data and signs of more weakness in the U.S. job market increased concerns over slowing economic growth.
Copper futures rose 0.1% to $3.7015 a pound after plummeting nearly 4% in the prior session. London-traded nickel futures slid nearly 3% on Thursday, while aluminum rose 0.2% from a 2.5% slide.
The weaker-than-expected trade and inflation data from China this week led to concerns that the economic rebound of the world’s largest commodity importer would be slower than expected, resulting in weak demand for the remainder of the year.
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