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Gold Recovers After Tumble; Profit-taking Impacts Price
Wednesday saw a stabilization in gold prices during Asian trading, following a fall from an all-time high due primarily to apprehension over the possibility of sustained U.S. interest rates due to strong inflation figures. Heightened profit-taking activities after an earlier sprint to $2,200 this week added to the precious metal's woes. Key market players initially speculated on early interest rate reductions by the Federal Reserve; a theory quickly dispelled by Tuesday's consumer price index data.
Spot gold had managed to hold steady at $2,159.32 per ounce, as April gold futures saw a minor slip of 0.1% to $2,164.45 per ounce at 00:13 (04:13 GMT). These instruments found themselves about 2% lower than their record highs from earlier this week. Spot gold had reached a record-breaking $2,195.20 an ounce, compared to gold futures hitting their peak at $2,203.0 an ounce on Monday.
Impact of CPI Data & The Market Gearing Up for More Reports
According to the February CPI data, U.S. inflation saw a bit more growth than initially forecasted, remaining well above the Federal Reserve's annual 2% benchmark. The figures left the Federal Reserve with less motivation to start slashing interest rates just yet, despite investors still projecting a 70% probability for a 25 basis point cut in June as per the CME Fedwatch tool.
This puts the spotlight on future releases of producer price index and retail sales data to anticipate more potential cuts for the U.S. economy. Increased signs of permanence in economic stability will enable the Fed to uphold higher interest rates for a more extended period, which might hamper the demand for the yellow metal as a safe haven. However, gold has posted considerable gains year to date in 2024.
Impact on Other Precious Metals and Industrial Metals
The American dollar's sustained strength and the rise in U.S. Treasury yields have generated pressure on gold and fellow precious metals. Platinum futures have held steady around $927.90 per ounce, with silver futures experiencing a 0.4% drop to $24.297 per ounce.
In the industrial metals sector, copper futures for May experienced a 0.2% drop to 3.9283 per lb. The red metal had seen a recent boost due to expectations of China—the world's largest importer—introducing additional stimulus measures for enhancing economic recovery this year. However, China's economic outlook remains bleak, notably after setting a rather conservative GDP target of 5% for 2024, the same as the previous year.
