Gold prices remained relatively stable on Wednesday, showing little movement. This steadiness followed a period of volatility as market participants awaited signals from the Federal Reserve regarding potential interest rate cuts in 2024.
Meanwhile, copper prices experienced a significant retreat from their 11-month highs in the industrial metals sector. This decline can be attributed to a combination of profit-taking and the strength of the U.S. dollar, which had a dampening effect on the broader metal markets.
Gold prices in the UAE saw an increase at the start of the trading day on Wednesday. The 24K variant of gold was trading at AED261.25 per gram in the morning, compared to the previous night’s closing price of AED260.5 per gram. This represented a rise of AED0.75 per gram. Similarly, the other variants also opened higher, with the 22K variant at AED241.75, the 21K variant at AED234.0, and the 18K variant at AED200.75.
Read more: UAE gold prices show slight increase ahead of Fed meeting
Although gold prices had dropped from their record highs earlier in March, they seemed to have found support around the $2,150 per ounce level. At the time, spot gold was hovering around $2,159.19 per ounce, while gold futures expiring in April saw a slight increase of 0.1 percent to $2,162.15 per ounce by 00:37 ET (04:37 GMT).
Awaiting Fed meeting for rate cut cues
The focus of the metal markets has now shifted to the conclusion of the Federal Reserve meeting later on Wednesday. It is widely anticipated that the central bank will maintain its current interest rates. However, any indications regarding future interest rate cuts in 2024 are expected to greatly influence the direction of gold prices. Market participants are particularly interested in the press conference with Fed Chair Jerome Powell following the meeting. There is a possibility that the central bank may adopt a more hawkish stance and revise its outlook for interest rate cuts this year, especially considering that inflation has been higher than expected for the past two months. If interest rates are expected to remain higher for a longer period, it would have negative implications for gold and other precious metals.
The recent rally in gold was largely driven by expectations of rate cuts in 2024, so any signals suggesting a different direction would likely lead to near-term weakness in the yellow metal and its counterparts.
Other precious metals
In addition to gold, other precious metals also experienced some consolidation during the week. Platinum futures dropped by 0.5 percent to $893.50 per ounce, while silver futures stabilized at $25.148 per ounce.
Turning to copper, three-month futures on the London Metal Exchange remained below the closely watched level of $9,000 per ton, while one-month U.S. copper futures increased by 0.3 percent to $4.0793 per pound. Both copper instruments saw a significant decline from their 11-month highs earlier in the week due to the strength of the U.S. dollar and anticipation surrounding the Federal Reserve’s actions. The initial boost resulting from the possibility of reduced copper output in China also seemed to have lost momentum. Market attention now shifts to the release of key purchasing managers index readings from major global economies in the coming days, as these reports may provide further insights into copper demand.
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