Gold prices dipped in Asian trading on Friday, stepping back from recent record highs amidst a notable surge in the dollar, prompted by an unexpected interest rate cut by the Swiss National Bank, which exerted pressure on metal markets.

The precious metal had previously climbed to unprecedented levels surpassing $2,200 per ounce subsequent to the Federal Reserve’s commitment to a minimum of three interest rate cuts in 2024. However, this peak was short-lived as the dollar rallied strongly following dovish indications from other prominent central banks.

Spot gold experienced a 0.4% decline, settling at $2,173.62 per ounce, while gold futures expiring in April dropped nearly 0.5% to $2,174.90 per ounce by 00:28 ET (04:28 GMT).

The strength of the dollar weighed heavily on gold, with the dollar index reaching a three-week high above the 104 mark. This surge in the greenback ensued after a surprise rate cut by the SNB, combined with dovish signals from the Bank of England, positioned the dollar as the sole major high-yielding, low-risk currency.

The resilience exhibited by the U.S. economy, evident in the optimistic outlook from the Fed and robust purchasing managers index data, further bolstered confidence in the dollar, intensifying pressure on metal markets. This dynamic is particularly pronounced given that investments in precious metals like gold do not offer direct yields.

Additionally, the prevailing strength of the dollar is anticipated to constrain significant upside movements in bullion, at least until the Federal Reserve initiates interest rate reductions later this year. Market expectations indicate a 25 basis points rate cut by the central bank in June, as per the CME Fedwatch tool.

The eventual reduction in interest rates is projected to positively impact bullion prices later this year, with analysts at Citi setting a year-end price target of $2,300 per ounce for gold.

Other precious metals also experienced declines in Asian trading, relinquishing a considerable portion of their post-Fed gains. Platinum futures retreated by 0.7% to $905.10 per ounce, while silver futures dropped by 1% to $24.758 per ounce.

Furthermore, copper prices retreated from 11-month highs amid growing concerns over China’s economic outlook. Three-month copper futures on the London Metal Exchange fell by 1% to $8,882.0 per ton, while one-month U.S. copper futures declined by 1.2% to $4.0175 per pound. These declines were driven partly by China’s stock market downturns on Friday, fueled by apprehensions regarding slowing economic growth and potential U.S. sanctions.

Despite these challenges, the outlook for copper markets remains tight, especially with reports indicating plans by major Chinese copper refiners to reduce output this year.