Gold prices showed minimal movement in Asian trading on Tuesday, staying close to record highs due to uncertainties surrounding the global economy and speculation about early interest rate cuts, leading to a significant surge in gold values.
However, the upward trend seemed to have halted, awaiting further signals on the U.S. economy, especially from remarks by the Federal Reserve and crucial labor market data expected later in the week.
As of 00:40 ET (05:40 GMT), spot gold experienced a 0.2% increase, reaching $2,118.59 per ounce, while gold futures maturing in April remained steady near $2,126.75 per ounce. Both instruments closed above $2,100 per ounce for the first time on Monday, approaching the record highs of $2,135.72 per ounce for spot gold and $2,130.20 per ounce for futures.
The surge in demand for gold was fueled by indicators suggesting a cooling U.S. economy, coupled with signs of a recession in Europe and Japan, along with less-than-optimistic growth forecasts from China, contributing to increased safe-haven demand.
Despite these factors, the anticipation of further insights into U.S. interest rates, particularly from Federal Reserve Chair Jerome Powell this week, hindered additional gains in gold. Powell is expected to testify before Congress on Wednesday, with analysts predicting he will maintain a cautious stance.
Following Powell's testimony, the release of nonfarm payrolls data on Friday is anticipated to provide additional clues about the labor market, a crucial consideration for the Fed in making decisions about interest rates.
The prevailing risk for gold prices continues to be higher U.S. interest rates, limiting any potential rise to record highs. Elevated rates create pressure on gold by raising the opportunity cost of investing in the precious metal.
Other precious metals experienced some gains this week, albeit briefly. Platinum futures dipped 0.7% to $896.60 per ounce after briefly surpassing the $900 level, while silver futures increased by 0.2% to $24.040 per ounce.
In the realm of industrial metals, copper futures maturing in May saw a slight decline of 0.1% to $3.8507 per pound. The red metal's prices remained relatively unaffected by unimpressive economic signals from China.
Despite China setting a 5% GDP target for 2024, matching the goal for 2023, and pledging additional policy support for the economy, the lack of clear, concrete measures to boost growth did little to uplift sentiment over China. Separate data also indicated that China's services sector exhibited slower-than-expected growth in February, indicating ongoing weakness in the economy.
Paraphrasing text from "Investing" all rights reserved by the original author.
