Gold prices remained stable on Tuesday, recovering slightly from their lowest level this year, as traders waited for key US economic readings and Chinese PMI data. Spot gold was unchanged at $1,817.51 an ounce, while gold futures fell slightly to $1,824.20 an ounce by 20:55 ET (01:55 GMT). Both instruments recovered from a two-month low on Monday, but gold has still marked four consecutive weeks of losses due to concerns over rising interest rates and hot US inflation.
Traders are focusing on the US Purchasing Managers Index (PMI) readings for February, which are expected to show some cooling in economic activity. The Fed has signaled that it is seeking a further cooling in growth before it can consider pausing its pace of rate hikes. While a majority of traders are pricing in a 25 basis point hike by the central bank during its March meeting, a small group is positioning for a return to a 50 bps hike, given the recent stubbornness in inflation.
Rising interest rates are negative for metal markets, as they increase the opportunity cost of holding non-yielding assets. This trend had decimated metal prices in 2022 and is expected to weigh on the market in the near-term.
Other precious metals moved in a flat-to-low range on Tuesday. Platinum futures rose 0.2% to $942.70 an ounce, while silver futures sank 0.4% to $20.715 an ounce.
Among industrial metals, copper prices fell slightly but kept to a tight range as traders awaited key Chinese business activity data this week. Copper futures fell 0.2% to $4.0018 a pound and were trading just above a near two-month low.
Chinese PMI data is due on Wednesday, and it is expected to show that an economic recovery in the world’s largest copper importer remained mixed through February. While the service sector is expected to grow further from 2022 lows, the manufacturing sector is expected to remain in contraction territory.
In summary, traders are cautiously waiting for US economic readings and Chinese PMI data this week amid concerns over rising interest rates and hot inflation. While gold has marked four consecutive weeks of losses, other precious metals are also moving in a flat-to-low range. The metal market is expected to remain under pressure in the near-term due to rising interest rates.