Investing.com– Gold prices climbed in Asian trade on Thursday, remaining within striking distance of record highs as investors anticipated continued support for the precious metal in a lower interest rate environment.
Bets on a substantial interest rate cut by the Federal Reserve dwindled after core consumer price index inflation data for August surpassed expectations. Traders adjusted their expectations for a smaller, 25 basis point reduction later in September, causing the dollar to strengthen and limiting gold’s upward movement.
Gold prices and gold futures both posted gains, with spot gold rising 0.2% to $2,516.88 an ounce, and futures for December delivery edging up 0.1% to $2,544.55 an ounce by 00:36 ET (04:36 GMT).
### Gold Stalls Below Record Highs Amid Fed Decision and Inflation Report
Spot gold traded slightly below its all-time high of $2,532.05 an ounce, following a week where it came close to reaching this milestone. The safe-haven appeal of gold increased amid concerns of a potential U.S. recession, which led to a shift towards risk-off sentiment in the markets.
The market sentiment regarding the size of the Fed’s rate cut next week changed, with expectations diminishing for a 50 basis point reduction and now indicating a 25 basis point decrease. The prospect of lower rates presents a favorable scenario for gold and other precious metals by reducing the opportunity cost of holding non-yielding assets.
Before the upcoming Fed meeting, investors will also be focusing on the Producer Price Index (PPI) inflation data scheduled for later on Thursday.
### Copper Rises on Hopes of Chinese Stimulus Measures
Meanwhile, copper prices edged higher on Thursday, recovering from recent losses as weak economic indicators from China raised expectations of additional stimulus measures in the largest copper-consuming nation.
Benchmark copper on the London Metal Exchange increased by 0.4% to $9,180.0 a ton, while one-month copper futures rose by 0.3% to $4.180 a pound. Concerns about a slowdown in China’s economy negatively impacted copper prices in the past week as fears grew that reduced demand from the country could affect copper consumption. However, this situation has sparked hopes of more stimulus initiatives in China. Market analysts at Citi suggested that the Chinese government could implement further interest rate cuts and mortgage refinancing measures to support growth and domestic demand.
