Following a remarkable recovery from multi-year lows, gold prices slightly declined on Thursday as investors remained cautious of a further rise in the currency and Treasury rates.
By 19:35 ET, spot gold prices were down 0.3% to $1,655.86 per ounce, while gold futures were down 0.3% to $1,664.35 per ounce (23:35 GMT). On Wednesday, both financial instruments increased by around 2%, marking their strongest day in two months. The dollar fell substantially from a 20-year high, while 10-year U.S. Treasury rates dropped from a 12-year high, providing a significant lift to the metal markets on Wednesday. However, the dollar was trading far above its Wednesday lows and halted its decline. It stayed close to its 2022 high as well.
Outlook on Gold Prices
The largest obstacle to gold prices this year was a rising dollar. It received support from rising U.S. loan rates, which caused them to fall from two-year highs and embark on a protracted losing streak.
Traders are catching to see if the dollar’s slide will be maintained or only a blip before forwarding momentum. The rising inflation and a hawkish Federal Reserve, which supported the dollar, are still in effect. This week, several Fed members reaffirmed that the institution would continue aggressively hiking interest rates this year to stop inflation from hitting a 40-year high.
Gold is trading below the crucial $1,700 barrier. This is keeping it vulnerable to further falls in the near term. Retaking the $1,650 level is a good indication for the precious metal. Copper prices among industrial metals decreased by 0.1% to $3.3780 after climbing by over 3% from a two-month low the previous day.
A weaker dollar catalyzed a widespread surge in red metal. But like gold, it is nevertheless vulnerable to pressure from the strengthening of the dollar. Markets for copper are also anticipating Friday’s report on Chinese industrial activity. The data should reveal a prolonged slowdown in the top copper importer in the world, signaling a decline in the market for the red metal.
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