Gold prices remained steady on Thursday as traders braced themselves for key data on U.S. economic growth and inflation, while high demand for safe-haven assets kept the precious metal close to key levels. Here’s what you need to know:
Stable Trading Near $2,000 an Ounce
Bullion prices traded just below the $2,000 an ounce mark, where it has been hovering for the past week due to increased demand for safe-haven assets and speculation on U.S. monetary policy and interest rates. Spot gold rose by 0.1% to $1,990.01 an ounce, while gold futures increased by 0.2% to $1,999.85 an ounce by 20:32 ET (00:32 GMT). Both instruments saw marginal increases for the week.
Focus on U.S. First Quarter GDP Data
The main focus of the day was the U.S. first quarter GDP data, which is expected to reveal a cooling growth after a strong fourth quarter. The economy is anticipated to be impacted by high interest rates, elevated inflation, and slowing manufacturing activity in the past three months. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, was also due later in the day, expected to show that inflation remained sticky in March from the previous month.
Uncertainty Over Interest Rates Weighs on Metal Markets
The Federal Reserve is expected to hike interest rates by 25 basis points in the upcoming meeting next week. However, the uncertainty over where rates will go later in the year weighed on metal markets in recent sessions. This was especially apparent as economic data painted a somewhat weak picture of the U.S. economy. Despite signs of slowing growth, several Fed officials called for more rate hikes this year, especially as inflation remains well above the central bank’s target range. This scenario poses a threat to gold and other metals, as it pushes up the opportunity cost of holding non-yielding assets.
Safe-Haven Demand for Gold
Gold benefited from the safe-haven demand in recent sessions, following a string of weak earnings on Wall Street and resurgent fears of a banking crisis. Other precious metals moved slightly higher on Thursday, with platinum futures up 0.1% and silver adding 0.5%. In contrast, copper prices remained pinned at a five-week low due to fears of slowing economic growth and weaker demand for the red metal. Copper futures rose by 0.1% to $3.8572 a pound after falling sharply for the past six sessions.
While gold prices remain steady, traders are closely watching the U.S. GDP and inflation data. Uncertainty over the Fed’s interest rate policies continues to weigh on metal markets, particularly as inflation remains high. Despite this, gold benefits from safe-haven demand due to weak earnings on Wall Street and resurgent fears of a banking crisis. As always, it’s important for traders to keep an eye on market trends and stay informed to make sound investment decisions.