Gold prices are edging closer to record highs, while copper rebounds on signals from China.

Gold prices stabilized in Asian trading on Thursday, hovering near a record high as traders invested in the precious metal ahead of further cues on U.S. inflation and interest rates.

In the realm of industrial metals, copper prices rebounded from recent losses, edging back towards 11-month peaks following reports indicating that Chinese copper smelters were contemplating output cuts.

Bullion prices regained a significant portion of their losses this week amidst expectations that the Federal Reserve might implement interest rate cuts as early as June. However, the strength exhibited by the dollar, which remained close to a one-month high, prevented gold prices from reaching new record highs.

Spot gold steadied at $2,195.34 per ounce, while gold futures expiring in April remained stable at $2,215.80 per ounce by 01:09 ET (05:09 GMT). Spot prices hovered just below the record high of $2,222.90 per ounce reached last week.

The focus has now shifted to the PCE price index data, which is the Fed’s preferred measure of inflation and is scheduled for release on Friday. Any indications of moderating inflation are likely to fuel significant gains in metal markets, as they increase the likelihood of early interest rate cuts.

In addition to the PCE data, separate speeches from Fed Chair Jerome Powell and FOMC member Mary Daly are also anticipated on Friday. Any hints from these officials regarding interest rate cuts will be closely monitored, especially following somewhat hawkish remarks from other Fed officials earlier this week. Governor Christopher Waller cautioned against rushing into rate cuts, citing persistent inflation and the resilience of the U.S. economy.

The prospect of prolonged higher interest rates doesn’t bode well for gold prices, as it raises the opportunity cost of holding bullion.

This sentiment also weighed on other precious metals. Platinum futures climbed 0.3% to $914.0 per ounce, while silver futures stabilized at $24.777 per ounce.

In the realm of copper, three-month copper futures on the London Metal Exchange increased by 0.5% to $8,913.0 per ton, while one-month U.S. copper futures rose by 0.4% to $4.0303 per pound.

Reuters reported that major Chinese copper smelters were contemplating output cuts and had refrained from providing guidance for copper prices in the second quarter. Reports of potential Chinese production cuts, signaling tighter markets for refined copper, had previously led to significant gains in copper prices earlier in March, pushing them to 11-month highs. However, these gains were mitigated by data indicating that Chinese copper inventories remained robust, suggesting that markets might not be as tight as initially anticipated.