Gold Prices Dip From Record Highs as Dollar Recovers Amid Inflation Focus

Gold prices edged lower in Asian trade on Wednesday, retreating slightly as the U.S. dollar recovered from 13-month lows. Investors are closely watching upcoming inflation data for further clues on the Federal Reserve’s interest rate trajectory.

Gold Market Overview:

• Spot Gold: Fell 0.5% to $2,512.88 an ounce.
• Gold Futures (December): Decreased 0.2% to $2,547.60 an ounce by 00:37 ET (04:37 GMT). Spot prices had reached a record high of $2,532.05 an ounce last week.

Dollar’s Impact and Inflation Watch:
The dip in gold prices comes as the dollar regained some strength after hitting 13-month lows earlier this week. However, the yellow metal remains close to its recent peaks, supported by ongoing geopolitical uncertainties and the prospect of lower U.S. interest rates.

Despite the dollar’s recovery, expectations that the Federal Reserve will begin cutting interest rates as early as September have kept gold well-bid. Dovish comments from Fed officials have reinforced this expectation, with traders divided on whether the Fed will implement a 25 or 50 basis point cut, according to CME Fedwatch.

The upcoming Personal Consumption Expenditures (PCE) price index data, a key inflation measure favored by the Fed, is due on Friday and will likely provide more direction on future interest rate moves. Lower interest rates tend to benefit gold by reducing the opportunity cost of holding non-yielding assets, which has also supported demand for other precious metals.

• Platinum Futures: Fell 0.8% to $959.40 an ounce.
• Silver Futures: Dropped 0.5% to $30.280 an ounce.

Copper Prices Under Pressure Amid China Concerns:
Copper prices declined on Wednesday as a recent rally in the red metal showed signs of stalling. Fresh concerns about China, the world’s largest copper importer, have weighed on the market.

• Benchmark Copper Futures (London Metal Exchange): Fell 0.6% to $9,370.50 a ton.
• One-Month Copper Futures: Declined 0.7% to $4.2715 a pound.

Copper had seen a sharp rise over the past month, rebounding from multi-month lows in July due to fears of slowing global demand. However, these concerns resurfaced after Canada imposed steep trade tariffs on China’s electric vehicle sector, raising fears of a renewed trade conflict between China and the West. Such tensions could further weaken China’s already fragile economic recovery and reduce its demand for copper, especially given the importance of the EV sector as a key source of copper consumption.

As traders await the PCE data and monitor ongoing geopolitical developments, the interplay between interest rates, inflation, and global trade will continue to shape the outlook for both gold and industrial metals like copper.

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