On Monday, gold experienced a decline, losing a significant support level, as traders became cautious about assets that do not generate yield. This shift in sentiment occurred ahead of an upcoming Federal Reserve meeting, where further signals regarding interest rates are expected to be revealed later in the week.
In the UAE markets, the price of gold dropped over AED1 per gram during the opening of trading on Monday. According to data from the Dubai Jewellery Group, the 24K variant of gold was trading at AED260.0 per gram in the morning, compared to last week’s closing price of AED261.25 per gram. Other gold variants also saw declines, with 22K opening at AED240.75, 21K at AED233.0, and 18K at AED199.75 per gram.
Read more: Gold dips as dollar strengthens, traders await additional U.S. data
Additionally, the rally in industrial metals, including copper, seemed to have halted, as copper prices eased after reaching 11-month highs the previous week. The red metal also experienced profit-taking due to middling economic data from China.
Precious metals faced more significant losses, as the dollar stabilized near two-week highs in anticipation of the Federal Reserve meeting. Furthermore, 10-year Treasury yields remained comfortably above 4 percent.
Spot gold declined by 0.4 percent to $2,148.19 per ounce, while gold futures expiring in April slid by 0.5 percent to $2,151.05 per ounce at 00:20 ET (04:20 GMT).
Fed’s meeting: Focus on interest rate outlook
Market attention has now turned to the conclusion of the two-day Federal Reserve meeting on Wednesday, where it is widely expected that interest rates will remain unchanged. However, any indications of potential interest rate cuts will be closely monitored, especially given higher-than-expected inflation readings in February, which have prompted concerns about the central bank adopting a more hawkish stance.
This shift in expectations has also caused gold prices to retreat significantly from the record highs achieved earlier in March. Moreover, dropping below the support level of $2,150 potentially signals further losses in the near future.
ANZ analysts stated in a recent note that gold prices could potentially decline to as low as $2,100 per ounce in the short term. However, they also upgraded their end-2024 price target for gold to $2,300 per ounce, as they anticipate that eventual interest rate cuts and worsening economic conditions will likely support demand for the precious metal this year.
Other metals
Other precious metals also experienced declines on Monday, with platinum futures falling by 0.7 percent to $935.50 per ounce, and silver futures sliding by 0.7 percent to $25.198 per ounce.
On Monday, three-month copper futures on the London Metal Exchange dropped by 0.3 percent to $9,045 per ton, while one-month U.S. copper futures fell by 0.3 percent to $4.1092 per pound.
Although both copper instruments weakened, they remained close to the 11-month highs reached last week, following reports that China’s largest copper smelters were planning production cuts. This development indicates a potential shortage of refined copper supply and has been a significant driver of the recent rally in copper prices.
However, the rally cooled somewhat on Monday due to mixed economic data from China. While industrial production exceeded expectations during the January-February period, retail sales fell short of projections, and unemployment reached a five-month high.
The mixed data raised concerns about weak economic growth in the world’s largest copper importer, which could negatively impact its demand for the red metal.
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