Gold prices remained on Wednesday within a narrow range as the dollar’s strength hindered an overnight rebound, pending further indications regarding inflation and interest rates. The price of gold had experienced a significant decline from its recent record highs over the past two weeks due to dovish signals from other major central banks, which led traders to favor the dollar. The dollar index slightly increased in Asian trade and approached a one-month high.
On Wednesday, 27 March, the gold prices in the UAE saw a decline, erasing some of the gains made on the previous day. The price of the 24K variant of gold dropped by AED1 per gram, falling to AED263.75 from Tuesday’s closing price of AED264.75. On Tuesday, the yellow metal had gained AED1.75 per gram.
As for the other variants, the 22K opened at a lower price of AED244.25 per gram, the 21K at AED236.5 per gram, and the 18K at AED202.75 per gram.
Read more: Gold prices in UAE slip as investors monitor U.S. economic data, geopolitical tensions
Globally, at 00:25 ET (04:25 GMT), spot gold stabilized at $2,179.98 per ounce, while gold futures expiring in April saw a slight increase to $2,178.60 per ounce. Although gold prices made some gains in overnight trading, persistent dollar strength dampened any further upward momentum. Traders continued to favor the dollar based on dovish signals from the Swiss National Bank and the Bank of England, which positioned the greenback as the only high-yielding, low-risk currency.
Key data and Fed comments drive dollar flows
The anticipation of key data, such as the PCE price index, which is the U.S. Federal Reserve’s preferred measure of inflation, and comments from top Fed officials later in the week, prompted flows into the dollar. Traders were particularly interested in obtaining more signals regarding potential interest rate cuts in the United States. However, it is still expected that the Fed will only begin reducing rates starting in June, resulting in limited upside for gold in the meantime. Nevertheless, gold is anticipated to benefit from lower interest rates towards the end of the year.
In terms of other precious metals, platinum futures increased by 0.1 percent to $918.50 per ounce, while silver futures fell by 0.2 percent to $24.573 per ounce.
China’s gloomy outlook continues to push copper prices downward
As for industrial metals, copper prices extended their decline from 11-month highs on Wednesday due to prevailing weak sentiment towards China, the top importer of copper. Three-month copper futures on the London Metal Exchange fell by 0.4 percent to $8,836.00 per ton, while one-month U.S. copper futures fell by 0.3 percent to $3.9932 per pound.
Data released on Wednesday indicated a 10.2 percent increase in Chinese industrial profits during the first two months of 2024. However, a significant portion of this growth was attributed to a lower base for comparison from the previous year. Optimism regarding Chinese demand also diminished in recent sessions as inventory data revealed that Chinese copper stockpiles remained robust in 2024. This offset hopes of a potential copper supply shock following announcements from several major Chinese refiners about their plans to reduce production.
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