Gold prices surged to new highs on Friday, driven by expectations of interest rate cuts by the Federal Reserve. At 09:55 ET (13:55 GMT), gold rose 1.5% to $2,493.86 an ounce, while silver gained 1.6% to $2,533.10 an ounce, with both metals on track for weekly gains of over 2%.
Gold shines amid rate cut bets
Soft inflation data led to increased speculation of a rate cut in September by the Federal Reserve, although stronger consumer inflation numbers tempered expectations. The potential for lower rates supports gold, as it reduces the opportunity cost of holding non-yielding assets. Geopolitical tensions in the Middle East, particularly between Iran and Israel, added to the safe-haven appeal of gold.
Consider gold as a hedge against Middle East risks
Alpine Macro recommends investors to consider gold as a hedge against escalating tensions in the Middle East. The research firm warns of potential conflicts between Iran and Israel, which could impact global stability. The note highlights the volatile nature of the situation and the risks involved in the region.
Copper prices affected by Escondida strike
Copper prices dipped slightly on Friday but were set for their first weekly gain in six weeks due to a strike at the Escondida mine in Chile, the world’s largest copper mine. The strike has tightened the supply outlook for copper, supporting prices despite concerns over weak demand from China, the top copper importer.
Overall, the rise in gold prices, driven by rate cut expectations and geopolitical risks, along with the impact of the Escondida strike on copper prices, reflect the current market dynamics. Investors should monitor these factors closely to make informed decisions about their portfolios.