Gold prices benefits from weakness in dollar and Treasury yields
Gold prices rose in Asian trade on Thursday, benefitting from weakness in the dollar and Treasury yields as speculation over U.S. interest rate cuts grew ahead of key inflation data. The yellow metal saw a 0.4% increase to $2,381.73 an ounce, while gold futures expiring in August rose 0.3% to $2,386.75 an ounce.
Gold buoyant as Powell comments put CPI data in focus
The yellow metal was trading less than $100 below a record high, as Federal Reserve Chair Jerome Powell’s comments increased speculation of U.S. interest rate cuts. Powell indicated progress towards bringing down inflation and expressed that the central bank might not necessarily need inflation to fall below its 2% target to begin cutting rates, but they needed more confidence in easing inflation.
Traders largely maintained their bets on a September rate cut, with a 72.5% chance priced in for a 25 basis point cut. Powell’s comments shifted focus towards upcoming inflation data, which is expected to show a slight cooling.
Analysts at TD Securities predict that gold will continue to rise in the near term due to increased central bank buying in emerging markets and more clarity on U.S. interest rate cuts.
Copper rises on softer dollar, more China cues awaited
Copper prices also rose on Thursday due to a softer dollar, following steep losses in recent sessions. Economic data from top importer China has been mediocre, leading to concerns over a slowing economic rebound in the country.
Benchmark copper on the London Metal Exchange increased by 0.1% to $9,914.50 a tonne, while one-month copper futures rose by 0.5% to $4.6147 a pound. Market participants are now eagerly awaiting manufacturing data from China on Friday for further insight into the country’s economic situation.
In addition to the speculative increase in gold prices due to the possibility of U.S. interest rate cuts, the rise in copper prices can be attributed to a softer dollar. Investors are closely monitoring economic indicators from China, as the country plays a crucial role in the global economy. This focus on data from China is indicative of how interconnected the global markets have become, with events in one country sparking reactions in others.
