Gold prices struggled near their three-month lows on Wednesday, grappling with significant losses in the previous session as traders shifted their attention to the dollar in anticipation of further cues on US interest rates.
Federal Reserve Chair Jerome Powell is scheduled to testify before Congress later today, potentially providing additional insights into monetary policy and interest rates following mixed signals from the Fed last week.
Uncertainty surrounding the Federal Reserve prompted some investors to divert their funds into the dollar. This shift occurred because the central bank temporarily halted its rate hike cycle but indicated the possibility of future hikes later this year. Consequently, gold prices were adversely affected and remained largely confined within a narrow trading range observed over the past month.
The price of spot gold remained unchanged at $1,937.58 per ounce, while gold futures stabilized at $1,948.75 per ounce by 20:15 ET (00:15 GMT). Both instruments experienced declines ranging from 0.6% to 0.8% on Tuesday, partly influenced by stronger-than-expected US housing data.
Despite the consecutive three-day decline, gold prices still resided within the $1,930 to $2,000 per ounce trading range witnessed since mid-May. This lack of movement was attributed to a scarcity of significant catalysts.
While concerns regarding rising interest rates have curtailed significant gains in the precious metal, it has also received support from expectations of worsening economic conditions later in the year.
Other precious metals mirrored gold’s performance, with platinum and silver futures slightly declining on Wednesday after notable losses in the previous session.
The focus has now shifted to Powell’s testimony, which is anticipated to shed light on the Federal Reserve’s approach to interest rates amid the deteriorating economic trends observed this year.
Copper Makes Modest Gains Following China’s Rate Cut
Among industrial metals, copper prices inched up on Wednesday, extending the marginal gains from the previous session following China’s reduction of its benchmark lending rates.
Copper futures rose by 0.2% to $3.8865 per pound, building upon the 0.5% increase in the prior session.
China’s decision to cut its benchmark loan prime rate, the first time in 10 months, reflects the country’s struggle to stimulate its economy and support a gradual economic recovery.
Copper benefited from the hope that Chinese economic trends would improve due to additional stimulus measures, consequently boosting the nation’s demand for commodity imports.
However, sentiment regarding China’s economic recovery has recently soured, with several major investment banks revising their outlook for full-year economic growth.
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