Gold prices fall from record highs as rate fears persist; copper retreats

Gold prices declined in Asian trading on Tuesday as concerns over U.S. interest rates continued to weigh on the precious metal. The retreat from record highs was also driven by a decrease in safe haven demand due to easing uncertainty over Iran. Meanwhile, copper, which had experienced a rally to record highs, also reversed course on Tuesday as traders took profits and assessed its potential for the rest of the year. Gold had surged to a record high on Monday, driven by increased safe haven demand following the death of Iran’s President in a helicopter crash. However, the immediate impact of his death remained uncertain. Spot gold fell 0.5% to $2,413.77 an ounce, while gold futures for June delivery dropped 0.9% to $2,416.75 an ounce by 00:59 ET (04:59 GMT). The previous day, spot gold had reached a record high of nearly $2,450.
Gold’s safe haven demand has weakened as the Middle East remains relatively stable, shifting investor focus to concerns over U.S. interest rates.

Several Federal Reserve officials expressed the need for stronger evidence of easing inflation before considering a reduction in interest rates. This suggests that interest rates are likely to remain high for an extended period.

As a result, the dollar strengthened, with market participants anticipating the release of the minutes from the Fed’s late-April meeting on Wednesday. This, in turn, put pressure on metal prices and halted the recent rally in gold prices.

The appeal of non-yielding assets like gold diminishes in a high interest rate environment, as it increases the opportunity cost of investing in them.
On Tuesday, there was a decline in the prices of other precious metals as well. Platinum futures dropped by 1.6% to $1,042.60 per ounce, while silver futures fell by 2.5% to $31.628 per ounce. However, both metals managed to retain a significant portion of the gains they had made in previous sessions.

The price of copper also experienced a sharp decline after reaching record highs on Monday. Investors took a step back to assess the potential of the red metal for the rest of the year. The recent surge in copper prices was primarily driven by speculative frenzy over a possible supply deficit, leading to a short squeeze on the Comex exchange and further price increases.

However, these gains were tempered on Tuesday as attention turned to whether there would be enough copper shipments available to meet immediate demand. Three-month benchmark copper futures on the London Metal Exchange fell by 1.3% to $10,825.0 per ton after reaching a record high above $11,100 on Monday.
U.S. copper futures for the month dropped by 1.1% to $5.0510 per pound, stepping back from their previous record highs.