Investing.com — Gold prices stabilized in Asian trading on Wednesday, benefiting from a softer dollar, as markets braced for key U.S. consumer inflation data that will likely play a role in the interest rate outlook.
Among industrial metals, copper prices rose to the highest level in more than two years as the prospect of tighter supply and fiscal stimulus in top importer China helped offset concerns about sluggish demand.
Gold rose overnight after Federal Reserve Chairman Jerome Powell suggested US interest rates will not rise further. These comments were also a key factor in the company’s decline.
was flat at $2,357.65 per ounce, while the June expiration rose 0.1% to $2,361.90 per ounce at 00:50 ET (04:50 GMT).
CPI data was expected after PPI surprises on the upside
The markets were now fully focused on the April figures, especially after the overnight figures released surprised on the upside.
The stronger PPI reading raised fears that persistent inflation will deter potential rate cuts this year. A hot CPI reading is likely to heighten these concerns.
Although Powell’s comments, especially that monetary policy remained tight enough, helped allay market concerns about higher interest rates, the Fed chairman still warned that the central bank needed much more confidence that inflation would fall to its annual rate. target of 2%.
Such a scenario means the Fed is likely to keep rates high for longer, which in turn bodes poorly for metals prices. High interest rates increase the opportunity cost of investing in precious metals.
Other precious metals also advanced on Wednesday, benefiting from a softer dollar.
rose slightly to $1,065.85 per ounce, while the price rose 0.2% to $28.767 per ounce.
Copper prices held steady at a two-year high, with more Chinese signals awaiting
on the London Metal Exchange rose 0.6% to $10,145.0 per tonne, while remaining steady at $5.0137 per pound.
Both contracts were at their highest levels since April 2022 after top importer China said it will begin a massive bond offering worth 1 trillion yuan ($138 billion) this week. The issuance will be aimed at stimulating economic growth.
Copper prices have surged in the past two months, buoyed by the prospect of tighter supply amid Russian metals sanctions and Chinese refinery cuts.
The focus this week is now on the lectures from China, which are expected on Friday.
