Gold Prices Trim Weekly Gains Amid Reduced Rate Cut Expectations

Gold prices experienced a slight decline on Friday, reducing some of the week’s gains as comments from various Federal Reserve officials presented a more cautious perspective on potential interest rate cuts.

Earlier in the week, gold reached nearly $2,400 an ounce following some weak U.S. economic indicators. However, it began to retreat from these highs on Thursday and Friday. The price stabilized at around $2,377.40 an ounce, while futures for June delivery dipped slightly to $2,381.10 an ounce.

The drop in gold prices on Thursday came after several Federal Reserve officials warned against speculation regarding immediate interest rate reductions. These officials emphasized the need for stronger evidence indicating that inflation was declining, beyond a somewhat softer inflation report for April. Consequently, traders began to lower their expectations for a rate cut in September, causing the dollar and treasury yields to recover from earlier weekly dips.

Despite this retreat, softer-than-anticipated economic readings set gold on track for a 0.7% weekly gain. The yellow metal remains close to its record high of over $2,430 an ounce, although reaching this level in the near future seems unlikely.

Other precious metals also saw declines on Friday; however, they were still headed for significant weekly gains. Silver fell 0.2% but was up 6.2% for the week, while platinum decreased by 0.4% but recorded a 4.5% increase this week.

In the realm of industrial metals, one-month copper futures fell from two-year highs due to mixed economic data from China. On the other hand, three-month copper futures rose, benefiting from tight supply conditions and expectations of recovery in demand over the coming months. On the London Metal Exchange, copper prices increased by 0.6% to $10,445.0 a ton, while futures rose 0.3% to $4.8935 a pound.

China’s economic data released on Friday offered a mixed outlook. While industrial production showed stronger-than-expected growth, retail sales growth slowed, and fixed asset investment contracted at a quicker pace. Additionally, growth in the Chinese economy showed signs of deceleration. These mixed results created uncertainty for the world’s largest copper importer as it implements more stimulus measures to bolster growth.

Despite fluctuations, three-month copper futures reflected an optimistic outlook for a demand recovery and were nearly 4% higher this week, reaching two-year highs.