Investing.com– Gold prices fell in Asian trade on Monday, as a rush into risk-driven assets, on the back of increased rate cut expectations, largely left out the yellow metal, even as the dollar sank.
Gold Retreats as Rate Cut Speculation Boosts Stocks
Among industrial metals, copper prices retreated tracking mixed purchasing managers index data from top importer China, while a speculative frenzy that had initially fueled the metal’s advance also cooled.
Gold was also hit by waning safe haven demand after reports suggested that Israel and Hamas were close to entering a U.S.-brokered ceasefire agreement, which could dial down geopolitical tensions in the Middle East.
Gold fell 0.3% to $2,321.51 an ounce, while expiring in August fell 0.2% to $2,341.55 an ounce by 00:31 ET (04:31 GMT).
Losses in the yellow metal came as traders piled into more risk-driven assets, especially as recent data showed some cooling in U.S. inflation. Asian stocks surged on Monday.
Federal Reserve’s preferred inflation gauge, eased as expected in April, data showed on Friday. This sparked some bets that the Fed will begin cutting rates in September, with the Fed funds futures now showing a greater chance of a 25 basis point rate cut.
Still, this notion will be tested in the coming days with data due this Friday and a next week.
Expectations of rate cuts by the Fed and the ECB, at their respective meetings this week, also provided little support to gold.
Additionally, the recent rebound in the U.S. stock market and positive economic data may have diverted investor attention away from safe-haven assets like gold and towards riskier assets, contributing to the downward pressure on gold prices.
Other precious metals were somewhat mixed on Monday, after outperforming gold in recent weeks. Silver rose 0.3% to $1,046.60 an ounce, while platinum fell 0.2% to $30.370 an ounce.
Copper Prices Struggle Amid Mixed China Cues
Benchmark copper on the London Metal Exchange steadied at $10,093.50 a tonne, while one-month futures fell 0.2% to $4.6160 a pound.
Both contracts plummeted from recent record highs as a speculative frenzy that had fueled a copper rally through April and early-May ran dry.
Middling economic data from China also fueled doubts over demand for the red metal.
Data on Monday showed China’s manufacturing sector grew more than expected in May. But this contrasted data from last week, which showed the manufacturing sector contracted in May.
This mix of data from China may indicate a potential volatility in copper prices as investors navigate through conflicting signals about the strength of the Chinese economy and its impact on industrial metal demand. Investors will likely keep a close eye on upcoming economic releases from China for further clarity on the outlook for copper prices.
By analyzing the correlation between economic data from China and copper prices, investors can potentially gain insights into future price movements in the industrial metal market. Understanding the relationship between economic indicators and commodity prices is essential when making informed investment decisions in the metals sector.
