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Gold Prices Rise Modestly Amidst Fed Rate Cut Speculations

In Asian trading on Wednesday, gold prices experienced a marginal uptick, lacking substantial support from safe-haven demand. Recent remarks from Federal Reserve officials prompted markets to reassess expectations for potential interest rate cuts.

While tensions escalated between Israel and Hamas this week, with ceasefire negotiations showing limited progress, the yellow metal did witness some safe-haven interest. However, concerns over the resurgence of high U.S. interest rates and a strengthening dollar countered this.

Spot gold edged up by 0.2% to reach $2,317.70 per ounce, while gold futures for June delivery stabilized at $2,325.40 per ounce by 00:12 ET (04:12 GMT). Despite the increase, spot prices remained over $100 below the record high recorded in late April.

Gold Faces Pressure Amidst Fed’s Rate Cut Skepticism

Gold prices received minimal support from the recent weakening of the dollar, as the greenback rebounded following statements from several Fed officials suggesting a likelihood of maintaining current interest rates through 2024.

Minneapolis Fed President Neel Kashkari emphasized this perspective on Tuesday, leading traders to reconsider expectations of rate cuts for the year. Despite weaker payrolls data last week sparking anticipation of a September rate cut, Kashkari and colleagues highlighted persistent concerns regarding inflation.

The prospect of sustained high U.S. rates presents a challenge for gold, as it elevates the opportunity cost of investing in the precious metal.

Mixed Performance for Precious Metals Amidst Rate Uncertainty

In addition to gold, other precious metals demonstrated mixed performance amidst concerns over U.S. rate trends. Platinum futures remained steady at $988.35 per ounce, while silver futures saw a modest 0.3% increase, reaching $27.635 per ounce.

Copper Prices Retreat on Supply and Demand Dynamics

Copper prices retreated from their two-year highs on Wednesday, influenced by conflicting signals regarding supply dynamics. Expectations of tighter supplies were somewhat offset by U.S. miner Freeport-McMoran’s announcement of potential exports of up to 900,000 metric tons of copper concentrate from its Grasberg mine in Indonesia.

This possibility of increased exports served to counterbalance predictions of constrained supplies resulting from stricter sanctions on Russian metal exports and production cuts by Chinese refiners.

Outlook for Metal Markets Amidst Trade Data Anticipation

Copper futures on the London Metal Exchange for both three-month and one-month periods experienced declines, falling to $9,974.50 per ton and $4.5732 per pound, respectively.

Market participants remained cautious ahead of trade data from China, a key importer of copper, scheduled for release on Thursday. This data is anticipated to provide further insights into metal demand within the country.

In conclusion, gold and other precious metals continue to navigate a landscape marked by uncertainties surrounding U.S. interest rates and geopolitical tensions, while copper faces fluctuations driven by supply dynamics and demand signals from key markets.

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