Gold Prices Near Record Highs Amid Rate Cut Bets
Gold prices rose in Asian trading on Tuesday, approaching record highs as increased bets on Federal Reserve rate cuts from September boosted the yellow metal.
Market Movement
Spot gold climbed 0.2% to $2,427.77 per ounce, while gold futures for August delivery rose 0.1% to $2,432.30 per ounce by 00:46 ET (04:46 GMT).
Driving Factors
Gold prices are now less than $30 away from their late-May record high of $2,450 per ounce. This rise is primarily driven by expectations that the Fed will start cutting rates by September, spurred by soft inflation readings and dovish signals from the central bank.
On Monday, Fed Chair Jerome Powell noted increasing confidence that inflation is declining, which traders interpreted as a signal that rate cuts are imminent. Market sentiment reflects a nearly 90% probability of a 25 basis point cut in September, according to the CME Fedwatch tool.
Mixed Performance in Precious Metals
Other precious metals had varied performances; platinum futures fell 0.3%, while silver futures increased 0.2%.
Dollar’s Influence and Political Factors
Gold’s gains were tempered by a resilient dollar, which recovered from a one-month low. The dollar’s strength was partly attributed to rising speculation that Donald Trump could win a second presidential term. A failed assassination attempt on Trump seemed to boost his popularity, putting him ahead of Joe Biden in polls. Trump’s potential return to office is expected to bring more protectionist trade policies, which could increase inflation and support the dollar.
Copper Market Steady Amid China Concerns
In the industrial metals sector, copper prices remained flat due to concerns about China’s economic outlook. Benchmark copper futures on the London Metal Exchange fell 0.1% to $9,795.50 per tonne, while one-month copper futures rose 0.2% to $4.521 per pound.
Weaker-than-expected GDP data from China raised doubts about its economic recovery and subsequent copper demand. Additionally, a Trump presidency could pose further trade challenges for China, potentially weakening its economy further.
Conclusion
Gold prices continue to rise, driven by expectations of Fed rate cuts, but face limitations due to a strong dollar and political uncertainties. Meanwhile, copper prices remain steady amid concerns over China’s economic prospects.
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Disclaimer: This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.
