Gold prices tread water as Fed meeting looms

Investing.com-- Gold prices moved little in Asian trade on Monday, seeing little relief from recent losses as traders continued to price in higher-for-longer U.S. interest rates before a Federal Reserve meeting later this week.

The yellow metal tumbled from record highs hit earlier in April as safe-haven demand waned in the absence of any escalation between Iran and Israel. This left gold vulnerable to outflows in the face of restrictive U.S. monetary policy.

Spot gold steadied at $2,334.66 an ounce, while gold futures expiring in June were flat around $2,345.60 an ounce by 01:10 ET (05:10 GMT). 

Fed meeting awaited after PCE data shock

A relatively strong dollar also weighed on gold, especially in the wake of a hotter-than-expected reading on the PCE price index- which is the Fed’s preferred inflation gauge.

Growing signs of sticky U.S. inflation saw traders largely price out expectations for early rate cuts by the Fed. The central bank is now only expected to begin trimming rates in September, or even the fourth quarter.

This put an upcoming Fed meeting squarely in focus more cues on the central bank’s plans for rates. 

Higher-for-longer rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. But while gold prices sank in recent sessions, they were still trading positive for the year, amid persistent fears that high interest rates will weigh heavily on global economic growth. 

Other precious metals were mildly positive after steep losses through the past two weeks. Platinum futures rose 0.6% to $930.05 an ounce, while silver futures rose 0.3% to $27.613 an ounce.

Copper prices advance, back at 2-year highs on China hopes 

Among industrial metals, copper prices hit two-year highs on Monday as hopes for strong Chinese demand were boosted by Beijing further loosening restrictions on house buying in major cities, to support the property market.

China’s property market is a key facet of the economy, and is also a major driver of copper demand in the world’s largest importer of the yellow metal. 

Three-month copper futures on the London Metal Exchange rose 0.4% to $10,015.0 a ton- their highest level since early-May 2022. One-month copper futures rose 0.2% to $4.5962 a pound. 

Expectations of tighter supplies had been a major boost to copper prices in recent weeks, especially as the West tightened its sanctions on Russian metal exports.

Focus was now on key Chinese purchasing managers index data due this week for more cues on the world’s biggest copper importer.