Gold Prices Steady but Facing Significant Weekly Losses as Rate Cut Hopes Diminish

Gold prices remained stable in Asian trading on Friday, though they experienced significant declines throughout the week as worries about prolonged high U.S. interest rates pulled the precious metal down from its record levels.

The fears surrounding interest rates impacted broader metal prices, with industrial metals like copper also noting substantial drops after reaching peak values earlier in the week.

Additionally, gold faced a reduction in safe haven demand following the unexpected stabilization of tensions in the Middle East after the death of the Iranian President.

As of 00:37 ET (04:37 GMT), gold increased by 0.2% to $2,332.77 an ounce, while June futures declined by 0.1% to $2,333.85 an ounce.

### Gold Suffers Significant Weekly Losses Due to Rate Concerns

Gold is on track to lose approximately 3.4% this week, significantly dropping from the highs recorded at the beginning. The decrease in demand for gold as a safe haven has left the metal vulnerable to headwinds from worries about enduring high interest rates.

Recent hawkish signals from the Federal Reserve indicated increasing concern among policymakers regarding persistent inflation, with some even suggesting the possibility of further rate hikes. While additional increases seem less likely, the hawkish tone has led traders to reduce expectations for any rate cuts in 2024. Currently, market expectations show an almost equal chance of either a rate cut or a hold in September.

Prolonged high rates typically pose challenges for gold, as they elevate the opportunity cost of holding the non-yielding asset.

Other precious metals showed some stability on Friday but were also positioned for weekly losses. Platinum rose by 0.4% to $1,029.90 an ounce, and palladium increased by 0.4% to $30.582 an ounce.

### Copper Stabilizes After Sharply Falling from Highs

On the London Metal Exchange, copper prices climbed by 0.8% to $10,450.50 a ton, while the one-month U.S. copper contract increased by 0.7% to $4.8102 a pound.

Both contracts had sharply dropped from record highs earlier in the week, as the speculative buying that had driven those gains appeared to be easing. Traders are now monitoring whether physical deliveries on the contracts will occur on time, as this would provide further insights into copper supply conditions.

There’s also cooling sentiment regarding China, the largest copper importer, as expectations for additional stimulus measures have been tempered by ongoing trade tensions with the U.S. and conflicts regarding Taiwan.