Gold Prices Fall Below $2,400 Amid Rate Jitters, Copper Affected by Profit-Taking

Gold prices experienced continued declines in Asian trading on Thursday, retreating further from their recent record highs. This downturn was driven by renewed worries about elevated interest rates and diminishing demand for gold as a safe haven asset.

Industrial metals also faced losses, with copper prices dropping significantly from their peaks due to profit-taking activities and pressure from a strengthening dollar. However, prices for copper showed some signs of stabilization during Asian trading.

As of the latest figures, gold was down 0.3%, trading at $2,372.38 an ounce, while June futures fell 0.8% to $2,375.15 an ounce. This decline positions spot prices well below this week’s record high of $2,450 an ounce.

Concerns Over Rising Rates Amid Sticky Inflation

Metal prices were further pressured by a rebound in the dollar, which reached a one-week high following the release of minutes from the Federal Reserve’s late-April meeting. These minutes indicated that policymakers are increasingly worried about persistent inflation.

Some officials expressed a willingness to consider additional interest rate increases to combat inflation, although this scenario seemed unlikely at the moment. Nonetheless, the Fed is expected to maintain elevated rates for an extended period in response to ongoing inflation concerns, as indicated by various policymakers this week who expressed doubts about achieving the 2% inflation target in the near future.

Sustained high interest rates are detrimental to gold and other precious metals, as they raise the opportunity cost of investing in these assets. This dynamic has resulted in gold’s brief encounters with record highs remaining elusive this year.

Additionally, the absence of significant geopolitical tensions in the Middle East following the death of the Iranian President has diminished gold’s appeal as a safe haven.

Other precious metals also fell on Thursday, with silver declining 0.8% to $1,041.20 an ounce and platinum sinking 2.5% to $30.727 an ounce.

Profit-Taking and Concerns Over China Weigh on Copper Prices

Copper prices dropped 0.4% to $10,372.50 a ton, with another contract stabilizing at $4.8030 a pound. Both contracts were recovering from steep declines experienced earlier in the week.

The decline in copper prices was attributed to a cooling of speculative frenzy surrounding the metal, leading to profit-taking after a recent surge. Additionally, renewed concerns regarding China crept back into market sentiment, as tensions between Washington and Beijing appeared to be escalating. This situation somewhat undermined optimism related to recent stimulus efforts from China, with market participants eager to see how those measures would be implemented.