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Investing.com — Gold prices edged higher in Asian trading on Thursday, but mostly within recent trading ranges as multiple signals from the U.S. Federal Reserve reiterated the outlook for U.S. interest rates to rise for an extended period of time. I stayed inside.
Bullion prices showed some relief this week as they plunged from three-month highs. However, with U.S. Treasury yields remaining close to recent peaks, further weakness in the dollar is likely to be limited.
Gold has mostly stayed within the $2,000 to $2,050 per ounce trading range that has been in place for the past month. Further gains in the yellow metal were hampered by the prospect of rising interest rates, while the downside was also limited by growing concerns about deteriorating economic conditions around the world, particularly with Japan and the UK entering recession.
By 12:13 a.m. ET (5:13 p.m. Japan time), the price rose 0.2% to $2,029.78 an ounce, while the price for April expiry rose 0.3% to $2,039.55 an ounce.
Fed minutes, official speeches reiterate interest rate outlook
The report, released on Wednesday, showed the bank is in no hurry to start cutting rates early. Many Fed officials echoed that sentiment this week, citing concerns about persistently high inflation and the continued strength of the U.S. economy.
The comments largely erased traders' expectations for rate cuts in March and May, but raised expectations that the central bank would keep rates unchanged in June.
According to the data, traders are pricing in a 53.6% chance of a 25 basis point rate cut in June and a 28.7% chance that interest rates will be left unchanged. The latter probability increased from 19.7% last week.
The prospect of rising interest rates over time bodes poorly for gold, given the increased opportunity cost of investing in the yellow metal.
Still, analysts at Goldman Sachs said in a recent note that the yellow metal would benefit greatly from rate cuts this year. Citi analysts had predicted that gold prices could reach $3,000 an ounce by 2025.
Other precious metals rose on Thursday, but remain down sharply from the previous session. It rose 0.4% to $894.10 an ounce and rose 0.6% to $23.012 an ounce.
Copper prices stabilize as China's optimism cools
Among industrial metals, copper prices stabilized at a three-week high as investors wait to see if the Chinese government will roll out more economic stimulus.
The pound, which expires in March, is hovering around $3.8792, up 1.1% this week.
Copper prices have been rising in recent trading due to a series of support measures from the Chinese government. But after three years of weak growth in China's economy, markets are now waiting to see whether the government will extend further support.
