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Investing.com — Gold prices were mostly weak in Asian trading on Friday as stronger-than-expected inflation data fueled concerns that the Federal Reserve will signal a rise in long-term interest rates at its next meeting. There was no price movement.
But the sentiment did little to stop copper prices from rising, with expectations that China’s supply would tighten significantly prompting heavy copper buying, sending copper prices to an 11-month high on Friday. .
On the other hand, gold bullion prices were under pressure due to the rise in bullion market prices. Strong inflation readings this week pushed the dollar to its highest in more than a week, but traders also positioned for future inflation.
It rose 0.1% to $2,163.98 an ounce, but the April expiration was stable at $2,168.05 an ounce by 01:17 ET (5:17 p.m. Japan time).
Gold nurses fall from all-time highs as Fed meeting approaches
Gold prices are expected to fall for the week after plummeting from a record high hit on Monday.
Pressure on the yellow metal primarily stemmed from growing anxiety about next week’s Fed meeting, especially after inflation readings were stronger than expected for the third straight month.
The persistence of inflation has made traders increasingly concerned about hawkish signals from the Fed, especially after the central bank signaled that its 2024 rate cut plans will depend largely on the trajectory of inflation. Rising interest rates over an extended period of time bodes poorly for gold and other non-yielding assets.
Still, ANZ analysts said in a recent note that while gold could see some weakness in the short term, there are still a number of factors that favor the yellow metal for the rest of the year. It also raised its 2024 price target for gold to $2,300 per ounce from $2,200.
Other precious metals also rose on Friday and were on track to outperform gold this week. It rose 0.2% to $932.50 an ounce and rose 0.6% to $25.212 an ounce.
China’s supply shortage pushes copper prices to 11-month high
Three-month contracts on the London Metal Exchange rose 1.5% on Friday, surpassing the $9,000 per tonne level for the first time since April 2023. U.S. one-month yields rose 1.3% to $4.1022 per pound, an 11-month high.
Both contracts are expected to rise more than 5% this week, the highest weekly gains so far in 2024.
The rise in copper prices was mainly triggered by media reports that China’s major copper smelters are planning to cut production in concert, limiting the supply of refined copper.
Analysts at Citi said there is still room for copper to rise, with an overweight rating on the metal and a potential upside of up to $9,500 per tonne by June 2024.
