Gold prices fall below $2,400 on rate jitters, copper hit with profit-taking

Investing.com-- Gold prices saw extended losses in Asian trade on Thursday, pulling back further from record highs as renewed concerns over high interest rates and waning safe haven demand battered the yellow metal.

Industrial metals also joined in on the losses, with copper prices falling sharply from record highs amid profit-taking and pressure from the dollar. But prices of the red metal steadied in Asian trade. 

Spot gold fell 0.3 to $2,372.38 an ounce, while gold futures expiring in June fell 0.8 to $2,375.15 an ounce by 00:22 ET (04:22 GMT). Spot prices were now well below a record high of $2,450 an ounce hit at the beginning of the week.

Rate fears rise as Fed minutes show concerns over sticky inflation 

Metal prices were pressured by an overnight bounce in the dollar, which hit a one-week high after the minutes of the Federal Reserve’s late-April meeting showed policymakers were increasingly concerned over sticky inflation.

Some policymakers were also open to raising interest rates further to bring down inflation, although such a scenario appeared unlikely. 

Still, the Fed is likely to keep rates high for longer in the face of sticky inflation, with addresses from several policymakers this week showing that the bank had limited confidence in inflation reaching its 2% annual target in the near-term.

High for long rates bode poorly for gold and other precious metals, given that they increase the opportunity cost of investing in them. This notion has kept gold’s tryst with record highs fleeting so far this year. 

A lack of any major worsening in geopolitical tensions in the Middle East, after the death of the Iranian President, also sapped safe haven demand for gold.

Other precious metals also fell on Thursday. Platinum futures fell 0.% to $1,041.20 an ounce, while silver futures sank 2.5% to $30.727 an ounce.

Copper prices slammed by profit-taking, China jitters 

Benchmark copper futures on the London Metal Exchange fell 0.4% to $10,372.50 a ton, while one-month copper futures steadied at $4.8030 a pound. Both contracts were nursing a steep fall from record highs hit at the beginning of the week.

Losses in copper came as a speculative frenzy in the red metal now appeared to be stabilizing, leaving it open to profit-taking after a strong run over the past week. 

Concerns over China also crept back into markets, as a trade war between Washington and Beijing appeared to be heating up. This somewhat undermined optimism over recent stimulus efforts from China, although markets were also waiting to see how the measures will be executed.