Investing.com — Gold prices fell in Asian trading on Wednesday, extending steep overnight losses, sending the yellow metal sliding past a key support level as markets brace for potentially aggressive signals from the Federal Reserve later in the day .
The yellow metal fell further from April’s record highs as reduced safe-haven demand amid some de-escalation in global geopolitical tensions left it vulnerable to interest rate headwinds.
fell 0.1% to $2,285.19 per ounce, while the June term fell 0.3% to $2,295.25 per ounce at 23:50 ET (03:50 GMT). Spot prices fell below the closely watched level of $2,300 an ounce on Tuesday, leaving the yellow metal open to more losses ahead of more signals on US yields.
Fed meeting awaited, Powell turned aggressive
The focus was now squarely on the close two days later on Wednesday, when the central bank will leave interest rates unchanged.
But Fed Chairman Jerome Powell is widely expected to offer a hawkish outlook, especially after a string of higher-than-expected inflation numbers. A stronger than expected reading of the , for the first quarter, reinforced this idea on Tuesday.
Strong inflation data had traders steadily pricing in expectations of early rate cuts from the Fed. It is now expected that the central bank will not start cutting interest rates until September, if at all.
Higher interest rates do not bode well for gold as they increase the opportunity cost of investing in the yellow metal. Dwindling expectations of interest rate cuts have dragged gold prices down from record highs of the past two weeks.
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Other precious metals also fell on Wednesday as the dollar surged to a six-month high. fell 0.2% to $943.95 per ounce, while the price fell 0.2% to $26.598 per ounce.
Copper prices are falling from their highest level in two years after a bumper April
Among industrial metals, copper prices fell from two-year highs under pressure from a stronger dollar, while strong gains through April also led to some profit-taking.
on the London Metal Exchange fell 0.8% to $9,910.0 per tonne, while the price fell 0.3% to $4.5285 per pound.
Both contracts rose between 14% and 16% in April on expectations of tighter supplies amid more sanctions on Russia and production cuts by major Chinese refiners.
But fears of a slowdown in economic growth – especially as interest rates remain higher for longer – could take away from buyers in the short term.
