Gold prices edge higher on weak US data; PCE inflation awaited

Investing.com-- Gold prices rose in Asian trade on Friday as signs of a cooling U.S. economy fed some demand for the yellow metal, although gains were limited in anticipation of more rate cut cues from key inflation data. 

The yellow metal was also set for steep weekly losses after tumbling from near record highs over the past five sessions, as traders largely priced out expectations for early U.S. interest rate cuts. 

Spot gold rose 0.2% to $2,335.86 an ounce, while gold futures expiring in June rose 0.2% to $2,335.68 an ounce by 01:00 ET (05:00 GMT). 

Bullion prices saw some relief after the dollar fell tracking softer-than-expected gross domestic product data. But this relief was limited as a stronger GDP price index saw traders further price out expectations of interest rate cuts by the Federal Reserve.

Gold set for weekly loss as PCE data looms 

Spot prices were set to lose 2% this week, as they extended a decline from record highs hit earlier in April. Prices had touched record highs of around $2,430 an ounce.

A key point of pressure on gold was lower risk premium over unrest in the Middle East, as an Iran-Israel war failed to materialize. 

But gold’s biggest source of losses was decreasing bets that the Fed will cut interest rates. The CME Fedwatch tool showed traders only expected the Fed to begin cutting rates by September or the fourth quarter.

This put upcoming PCE price index data squarely in focus. The reading is the Fed’s preferred inflation gauge, and is likely to factor into the central bank’s outlook.

Higher-for-longer rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. 

Other precious metals advanced on Friday, but were also nursing steep losses for the week. Platinum Futures rose 0.6% to $931.25 an ounce, while Silver Futures rose 0.9% $27.60 an ounce. 

Copper prices rebound to 2-year highs, BHP-Anglo deal eyed 

Among industrial metals, copper prices capitalized on a weaker dollar and rebounded to two-year highs. 

Three-month copper futures on the London Metal Exchange rose 0.8% to $9,983.50 a ton, while one-month copper futures rose 0.7% to $4.5745 a pound. 

Focus was now on a nearly $39 billion bid by top miner BHP Group Ltd (ASX:BHP) for smaller copper miner Anglo American PLC (LON:AAL), which could potentially create the world’s biggest copper miner. But reports showed that Anglo’s board was largely dismissive of the offer. 

The prospect of tighter markets remained in play after Chinese copper refiners signaled production cuts. Stricter Western sanctions on Russian metal exports also heralded tighter markets.