Gold prices saw a slight decline during Asian trading on Tuesday, yet managed to maintain levels above crucial support thresholds as market sentiment towards precious metals remained cautious in anticipation of a significant Federal Reserve meeting scheduled for later this week.
Meanwhile, copper prices experienced a marginal decrease but continued to hover near 11-month highs following an impressive surge in value over the past three trading sessions.
While bullion prices made a modest recovery this week, reclaiming the $2,150 per ounce support level on Monday amidst ongoing uncertainty surrounding the Federal Reserve’s policy stance, they remained notably below the record highs recorded earlier in March.
As of 01:30 ET (05:30 GMT), spot gold observed a 0.1% decrease to $2,158.26 per ounce, while gold futures expiring in April registered a similar 0.1% decline to $2,161.35 per ounce.
The strength of the dollar ahead of the Fed meeting exerted significant pressure on gold prices, with market participants displaying a preference for the greenback amidst expectations of dovish signals from the Bank of Japan and the impending Fed decision.
The dollar index surged to a two-week high on Tuesday, building on substantial gains accumulated over the preceding two sessions.
Market consensus anticipates the Federal Reserve to maintain interest rates at their current level following the conclusion of the two-day meeting on Wednesday. However, concerns persist regarding the potential delivery of hawkish signals by the central bank, particularly in light of recent inflation data surpassing expectations.
The likelihood of prolonged periods of elevated interest rates spells adversity for gold and other precious metals, as heightened rates elevate the opportunity cost associated with investing in this sector.
Elsewhere in the market, platinum futures observed a 0.7% decline to $913.15 per ounce, while silver futures saw a 0.3% dip to $25.192 per ounce.
Copper prices, although experiencing a slight decrease, remained within close proximity to recent peaks. Three-month copper futures on the London Metal Exchange slipped by 0.5% to $9,046.0 per ton, while one-month U.S. copper futures observed a 0.6% decline to $4.1052 per pound.
Despite these declines, both instruments retained positions near 11-month highs established on Monday, propelled by the anticipation of a potential deficit in Chinese refined copper supplies, coupled with robust industrial production data from China, the world’s largest copper importer.
