Gold prices under pressure from stronger dollar and rate cut uncertainty
Gold prices edged down on Monday as a steady U.S. dollar made bullion less affordable for overseas buyers, while investors awaited further clues on when the U.S. Federal Reserve would deliver its first interest rate cut.
FUNDAMENTALS
* Spot gold fell 0.3% to $2,328.20 per ounce as of 0112 GMT. U.S. gold futures were down 0.3% at $2,339.70 per ounce.
* The dollar edged up 0.1% against its rivals. A stronger dollar makes greenback-priced gold more expensive for buyers holding other currencies.
* The U.S. personal consumption expenditures (PCE) price index increased 0.3% last month, in line with forecasts, a development that is unlikely to change expectations that the Fed will hold off cutting interest rates until September.
* Fed policymakers sifting through the latest inflation data will find little to fuel a sense of urgency to cut rates, but also nothing to rule out the likelihood of rate reductions starting later this year. Lower interest rates boost the appeal of holding non-yielding bullion.
China’s gold consumption on the rise
China’s gold consumption in the first quarter climbed nearly 6% from a year earlier, the country’s Gold Association said. This increase in demand reflects the ongoing interest in gold as a safe-haven investment amid global economic uncertainties.
Physical gold dealers in India also experienced an uptick in demand as premiums were charged for the first time in nearly two months due to a pullback in domestic prices. However, in China, premiums decreased as the market adjusted to changing dynamics.
Challenges in the precious metals industry
Impala Platinum announced potential job losses totaling 3,900 as it undergoes restructuring in its South African operations in response to low metal prices. This highlights the challenges faced by companies in the precious metals sector as they navigate market conditions.
Additionally, China’s industrial profits declined in March, raising concerns about the pace of the country’s economic recovery. This slowdown in profits could impact demand for industrial metals like platinum and palladium.
Overall market performance
Spot silver fell 0.2% to $27.12 per ounce, platinum was down 0.1% at $915.10, while palladium lost 0.8% to $946.75. The performance of these metals reflects the broader trends in the precious metals market influenced by factors such as economic data, currency movements, and investor sentiment.
