Investing.com-- Gold prices fell in Asian trade on Wednesday, extending steep overnight losses that saw the yellow metal slide past a key support level as markets braced for potentially hawkish signals from the Federal Reserve later in the day.
The yellow metal fell further from record highs hit in April as diminished safe haven demand, amid some de-escalation in global geopolitical tensions, left it vulnerable to headwinds from interest rates.
Spot gold fell 0.1% to $2,285.19 an ounce, while gold futures expiring in June fell 0.3% to $2,295.25 an ounce by 23:50 ET (03:50 GMT). Spot prices fell below the closely-watched $2,300 an ounce level on Tuesday, leaving the yellow metal open to more losses before more cues on U.S. interest rates.
Fed meeting awaited, Powell to wax hawkish
Focus was now squarely on the conclusion of a two-day Fed meeting later on Wednesday, where the central bank is set to keep rates unchanged.
But Fed Chair Jerome Powell is widely expected to offer a hawkish outlook, especially after a string of hotter-than-expected inflation readings. A stronger-than-expected reading on the employment cost index, for the first quarter, furthered this notion on Tuesday.
Strong inflation readings saw traders steadily price out expectations of early rate cuts by the Fed. The central bank is now only expected to begin cutting rates by September, if at all.
Higher-for-longer interest rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. Dwindling expectations of rate cuts dragged gold prices down from record highs over the past two weeks.
Other precious metals also fell on Wednesday, as the dollar shot up to near six-month highs. Platinum futures fell 0.2% to $943.95 an ounce, while silver futures fell 0.2% to $26.598 an ounce.
Copper prices fall from two-year highs after stellar April
Among industrial metals, copper prices fell from two-year highs amid pressure from a stronger dollar, while stellar gains through April also made for some profit-taking.
Three-month copper futures on the London Metal Exchange fell 0.8% to $9,910.0 a ton, while one-month copper futures fell 0.3% to $4.5285 a pound.
Both contracts surged between 14% and 16% in April on expectations of tighter supplies, amid more sanction on Russia and production cuts by major Chinese refiners.
But fears of slowing economic growth- especially as interest rates remain higher for longer- may chip away at copper in the near-term.