Gold prices retreat from record highs with Fed minutes on tap; copper falls

Investing.com-- Gold prices fell in Asian trade on Wednesday, pulling back further from record highs as anxiety over high U.S. interest rates grew ahead of more cues from the Federal Reserve.

Losses extended into industrial metals, with copper prices pulling back further from recent record highs as a speculative frenzy in the red metal cooled ahead of more cues on physical supply and overall demand. 

A steady dollar also weighed on metal prices, while safe haven demand for gold cooled amid little signs of worsening geopolitical conditions in the Middle East, after the Iranian President was killed in a helicopter crash. 

Spot gold fell 0.2% to $2,415.61 an ounce, while gold futures expiring in June fell 0.3% to $2,418.75 an ounce by 00:23 ET (04:23 GMT). Spot prices still remained in sight of their recent peak of $2,450.06 an ounce. 

Gold hit by rate jitters as Fed minutes loom

The minutes of the Fed’s late-April meeting, which are due later on Wednesday, were now in focus for more cues from the central bank.

The Fed had kept rates steady during the meeting, while Chair Jerome Powell still flagged the possibility of rate cuts in 2024. Traders will be waiting to see if this was the case among all Fed officials, especially as inflation remained sticky.

A string of Fed officials warned this week that the central bank needed more confidence that inflation was coming down, before it could begin trimming rates. Their comments supported the greenback and pressured most high-risk and non-yielding assets.

High rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. While increased safe haven demand had pushed gold to record highs at the beginning of the week, a lack of escalation in the Middle East left the yellow metal vulnerable to rate pressures. 

Other precious metals also retreated on Wednesday. Platinum futures fell 0.4% to $1,058.35 an ounce, while silver futures fell 0.4% to $31.950 an ounce. 

A speculative frenzy in metal markets pushed silver prices to 12-year highs earlier this week, although the rally now appeared to be cooling. Platinum prices were also close to a one-year high.

Copper prices retreat as bulls pause for breath

Benchmark copper futures on the London Metal Exchange fell 0.9% to $10,730.0 a ton on Wednesday, while one-month U.S. copper futures fell 0.8% to $5.0595 a pound. Both contracts retreated further from record highs hit at the beginning of the week. 

A speculative frenzy- particularly a short squeeze on the Comex exchange- that had driven copper’s recent rally now appeared to have paused, as traders waited to see whether physical copper supplies could meet requirements.

Cooling optimism over China- the world’s biggest copper importer- also spurred some pullback in prices, as traders waited to see how Beijing would execute its recently outlined stimulus measures.