Metals Retreat Amid Rate Concerns and Fed Outlook

By Daniel M.

May 22, 2024   •   Fact checked by Dumb Little Man

Gold Pulls Back as Rate Anxiety Grows

Gold prices declined in Wednesday’s Asian trading, retreating from recent record highs amid heightened concerns over U.S. interest rates. The upcoming Federal Reserve minutes have intensified market focus, influencing the retreat in prices. Spot gold decreased by 0.2% to $2,415.61 an ounce, and June gold futures dropped 0.3% to $2,418.75 an ounce, although they still hovered close to the recent peak of $2,450.06.

The Federal Reserve’s late-April meeting minutes are eagerly anticipated for further insights, particularly regarding interest rates. Although rates were held steady, Fed Chair Jerome Powell hinted at possible cuts in 2024, which traders are now keenly awaiting confirmation of, especially given persistent inflation concerns. Several Fed officials have emphasized the need for more evidence of decreasing inflation before considering rate reductions, supporting the dollar and impacting riskier and non-yielding assets like gold. Without worsening geopolitical tensions to spur safe haven demand, gold remains sensitive to these rate adjustments.

Industrial Metals Also Face Downward Pressure

Copper and other industrial metals also saw declines, with benchmark copper futures on the London Metal Exchange falling 0.9% to $10,730.0 a ton. U.S. copper futures dropped 0.8% to $5.0595 a pound, moving away from the record highs set earlier in the week. The cooling of a speculative frenzy and anticipation of physical supply data have contributed to the downturn.

Silver and platinum futures similarly fell, with silver futures dropping 0.4% to $31.950 an ounce, retreating from 12-year highs, and platinum futures decreasing 0.4% to $1,058.35 an ounce, near one-year highs. The decline in these metals also reflects a broader cooling in the speculative excitement that had previously driven prices upward.

Optimism regarding China, the world’s largest copper importer, has also waned, influencing metal prices as traders await the effects of newly announced stimulus measures in Beijing.

Daniel M.

Daniel Moore is a seasoned trading analyst with over 20 years of experience navigating the ever-evolving financial landscape. Renowned for his unconventional yet effective approach, Daniel utilizes a blend of technical and fundamental analysis to identify hidden gems and craft winning trade strategies. He is a master at demystifying complex market data and translating it into actionable insights for traders of all experience levels.

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