Following additional indications that U.S. inflation was slowing, gold prices increased for a fourth straight session on Friday. Demand for the yellow metal as a safe haven was also supported by ongoing concerns about a 2023 recession. A day after data revealed that consumer price inflation also decreased, information released on Thursday revealed that the U.S. producer price index inflation increased at a slower rate in March. The numbers reinforced the notion that inflation was declining, which would encourage the Federal Reserve to become less interventionist.
Following the release of the data, the dollar fell to a level that is almost a year low, and Treasury yields decreased as well, helping gold prices. The yellow metal’s demand as a safe haven was further buoyed by numerous predictions of an impending U.S. recession, which would likely result in less hawkish Fed activity. Gold futures increased 0.3% to $2,060.75 per ounce, while spot gold increased 0.3% to $2,046.61 per ounce. Both securities were expected to rise for a fourth straight day and have weekly increases of around 2% each.
Over the past month, gold has surged, with safe-haven flows into the yellow metal originally being triggered by worries of a banking catastrophe. Although regulatory action curbed fears of a wider crisis, the failure of numerous U.S. banks caused markets to price in a less aggressive Fed approach as well as a likely recession this year due to the strain on the economy from high-interest rates. Given that higher interest rates increase the opportunity cost of keeping non-yielding assets, gold benefits from the prospect of a less hawkish Fed.
On Friday, more precious metals rose as well, setting the stage for a solid week. Silver futures increased by 0.9% to $26.148 per ounce, while platinum futures increased by 0.6% to $1,069.15 per ounce. Copper prices among industrial metals increased significantly as a result of a falling dollar. Optimism for a revival in demand in key importer China also helped the sentiment towards the red metal. Futures for copper increased 1% to $4.1680 a pound and were expected to rise by almost 4% this week. Despite a 19% decline in China’s imports of copper in March, the country’s imports as a whole improved, encouraging wagers that the demand for commodities will increase in the months to come.
