Gold prices saw a slight increase in Asian trade on Wednesday following comments from Federal Reserve Chair Jerome Powell that sparked speculation about potential interest rate cuts by the central bank.
Meanwhile, copper prices took a hit as mixed inflation signals from China caused a drop in prices after a recent recovery.
Gold had been gaining strength in recent sessions as the US dollar weakened amid expectations of a rate cut in September. However, the precious metal's rally stalled as the Fed did not provide clear signals on the future path of interest rates.
Gold futures rose 0.2% to $2,367.73 an ounce, while spot gold prices rose 0.3% to $2,373.90 an ounce by 00:20 ET (04:20 GMT).
Gold Stabilizes Post-Powell Testimony, CPI Data Awaited
Following Powell's testimony, gold prices stabilized after he indicated a cooling in the labor market and progress in reducing inflation. However, Powell reiterated the Fed's commitment to its 2% inflation target without giving direct hints on rate cuts.
Traders are still betting on a rate cut in September, but caution has increased ahead of key inflation data scheduled for Thursday, which is expected to show a slight decrease in June.
The US dollar gained strength after Powell's testimony, with the Fed Chair set to testify before the House later on Wednesday.
The outlook for gold remains tied to interest rates this year, with high rates putting pressure on precious metal markets in the past two years.
Copper Prices Decline on China Inflation Data
On the London Metal Exchange, benchmark copper prices fell 0.3% to $9,844.50 a tonne, while one-month copper futures sank 0.4% to $4.5652 a pound.
Sentiment towards copper was impacted by mixed inflation data from top importer China, where inflation shrank in June due to weak economic conditions. Although inflation slowed at its slowest pace in 16 months, China's deflationary trend continued.
Overall, gold prices are influenced by speculation around potential rate cuts by the Federal Reserve, while copper prices are impacted by economic conditions in China. Both metals are key indicators for investors looking to diversify their portfolios and navigate the global financial markets.