Investing.com — Gold prices extended losses in Asian markets on Thursday, sliding further from record highs as renewed concerns about high interest rates dented demand for the metal as a safe-haven asset.
Industrial metals also followed suit, with copper prices tumbling from record highs on profit-taking and dollar pressure, but prices of the red metal have stabilised in Asian markets.
By 12:22 a.m. ET (4:22 GMT), prices were down 0.3 to $2,372.38 an ounce, and for June expiry they were down 0.8 to $2,375.15 an ounce. Spot prices are well below the record high of $2,450 an ounce hit earlier in the week.
Fed minutes signal concern over stagnant inflation, raising interest rate worries
Metals prices were pressured by an overnight surge in gold prices, which hit a one-week high after minutes of the Federal Reserve’s late April meeting showed policymakers growing concern about rising inflation.
Some policymakers are open to further rate hikes to curb inflation, but that scenario seems unlikely.
Still, the Fed is likely to keep interest rates high for a long time as inflation persists, and speeches by several policymakers this week indicated the central bank has limited confidence that inflation will reach its 2% annual target in the near term.
Higher long-term interest rates are a bad sign given the increased opportunity cost of investing in gold and other precious metals. This thinking has made gold’s attempts to reach new all-time highs so far this year short-lived.
The lack of a significant deterioration in geopolitical tensions in the Middle East since the death of the Iranian president also weakened demand for gold as a safe-haven asset.
Other precious metals also fell on Thursday. It fell 0.% to $1,041.20 an ounce and fell 2.5% to $30.727 an ounce.
Copper prices plummet as profit-taking leads to China worries
It fell 0.4% to $10,372.50 per tonne, but stabilized at $4.8030 per pound. Both contracts have suffered significant declines from the highs reached earlier in the week.
Copper’s decline comes as speculative fever for the red metal appears to be easing, opening up opportunities for profit-taking after a strong showing over the past week.
Concerns about China have also resurfaced in markets as the trade war between Washington and Beijing appears to be escalating, which has somewhat dampened optimism over China’s recent stimulus measures, although markets are waiting to see how they are implemented.
