In the midst of contrasting expectations surrounding potential rate hikes by the Federal Reserve, gold prices experienced minimal fluctuations on Friday.
The yellow metal maintained a relatively narrow trading range observed over the past month, lacking clear signals from the Fed and the U.S. economy that could indicate a decisive breakout in either direction.
By 20:27 ET (00:27 GMT), spot gold remained unchanged at $1,958.26 per ounce, while gold futures stabilized at $1,970.45 per ounce. Both instruments were on track to conclude the week with slight declines of between 0.1% and 0.3%.
Following the Fed’s decision to maintain its benchmark rate on Wednesday, the central bank projected at least two additional rate hikes this year to address high inflation.
However, various U.S. economic indicators, such as subdued consumer inflation, higher-than-anticipated weekly jobless claims, and sluggish industrial production, bolstered speculations that the central bank may face limited economic leeway to continue raising interest rates.
Although gold initially experienced a sell-off following the Fed’s decision, it mostly recovered its losses on Thursday as traders reassessed their expectations regarding further rate hikes. Nevertheless, the precious metal remained unable to break out of the $1,930 to $2,000 trading range it has adhered to over the past month.
Nevertheless, the prospect of an extended pause in the Fed’s rate hike cycle favors gold, given that increasing interest rates elevate the opportunity cost of holding non-yielding assets.
Copper prices steadied on Friday but were poised to achieve their most robust performance in nearly three months as markets anticipated a boost in demand from China. This anticipation stemmed from the country’s implementation of additional stimulus measures to support its economic growth as the top importer.
China recently adjusted medium and short-term lending rates, with expectations of further reductions in the key loan prime rate next week as Beijing grapples with revitalizing a decelerating post-COVID economic recovery.
The resulting impact raised commodity prices across the board, driven by the hope that improved economic conditions in China would fuel the country’s demand for resource imports.
Copper futures settled at $3.8928 per pound, reflecting a 2.7% increase for the week.
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