Gold Prices Steady as Dollar Strengthens on Likelihood of Fewer Rate Cuts

Gold prices showed little movement in Asian trading on Friday, weighing down due to a rebound in the dollar. The prospect of fewer U.S. interest rate cuts has largely offset optimism stemming from reports of cooling inflation.

While gold has recorded some gains for the week, it remains significantly lower from record highs amid persistent high interest rates. Prices for gold increased by 0.1% to $2,305.23 per ounce, while gold futures for August also rose by 0.1% to $2,320.15 per ounce.

### Gold Under Pressure from Interest Rate Outlook

Recent sessions have seen a decline in gold and broader metal prices following the Federal Reserve’s indication that it expects to cut interest rates only once in 2024, down from earlier predictions of three cuts. Although gold initially saw some gains after softer-than-expected economic data put pressure on the dollar, traders eventually shifted back to the dollar in light of the Fed’s forecast.

The weaker-than-expected economic data had little impact on the dollar’s rebound, with Treasury yields also recovering from their earlier lows. Higher interest rates for an extended period can negatively affect gold and other metals, as they raise the opportunity cost of holding non-yielding assets. This sentiment kept the prices of other precious metals within a narrow range on Friday. Silver rose by 0.3% to $957.80 per ounce, while platinum slipped by 0.2% to $28.992 per ounce, both set for tepid weekly performances.

### Copper Prices Face Weakness Amid Deteriorating Sentiment

In the realm of industrial metals, copper prices saw a slight increase on Friday but are on track for a lackluster week, pressured by a stronger dollar. The benchmark price on the London Metal Exchange edged up by 0.3% to $9,824 per tonne, while one-month copper futures gained 0.2% to $4.4945 per pound.

Sentiment towards copper has soured due to new tariffs on Chinese electric vehicles imposed by the European Union, joining similar actions by the U.S. These tariffs are likely to hinder the fast-growing electric vehicle industry and thus negatively impact copper demand, which is significantly utilized in EV manufacturing. Additionally, escalating trade tensions between major global economies have raised fears of a renewed trade conflict.