Investing.com– Gold prices fell from record highs in Asian trade on Thursday as a rally in the yellow metal cooled, with market focus remaining on U.S. interest rate cuts and brewing fears of a recession.
The yellow metal surged to record highs this week amid growing conviction that the Federal Reserve will begin cutting rates in September.
But a mix of profit-taking and a rebound in the dollar pulled gold off its peaks on Thursday.
Gold fell 0.5% to $2,500.55 an ounce, while gold futures expiring in December fell 0.4% to $2,547.05 an ounce by 00:15 ET (04:15 GMT). Spot gold hit a peak of $2,532.05 an ounce on Wednesday.
Rate Cut Bets Persist, Labor Market Data Fuels Recession Jitters
Gold’s record highs came as the minutes of the Fed’s late-July meeting showed policymakers were largely in favor of lower interest rates, amid progress in bringing down inflation.
The minutes cemented bets on a September easing, although traders were split over a 25 or 50 basis point reduction.
A sharp downward revision in payrolls data released on Wednesday spurred renewed fears that a cooling labor market will result in a U.S. recession.
Focus is now on an address by Fed Chair Jerome Powell at the Jackson Hole Symposium on Friday.
Lower rates bode well for gold, given that they reduce the opportunity cost of investing in non-yielding assets. Other precious metals also saw mild gains on this notion, but largely followed gold.
Silver fell 0.4% to $970.0 an ounce, while platinum fell 0.3% to $29.448 an ounce.
Copper Dips Amid Global Growth Concerns
Among industrial metals, a recovery rally in copper prices stalled on Thursday amid renewed concerns over slowing U.S. growth. Persistent concerns over a Chinese slowdown also weighed, although copper demand in the country was seen marginally improving this week.
Benchmark copper on the London Metal Exchange steadied at $9,262.50 a ton, while one-month copper futures fell 0.2% to $4.1930 a pound.
Analysis: Gold prices retreated from record highs as investors digested the possibility of U.S. interest rate cuts and fears of a looming recession. The minutes of the Fed’s late-July meeting supported bets on a September easing, but a downward revision in payrolls data sparked concerns about the labor market and its impact on the economy. Lower rates are generally positive for gold, leading to some profit-taking in the precious metal. The focus now shifts to Fed Chair Jerome Powell’s upcoming speech, which could provide further insights into the central bank’s monetary policy. Meanwhile, copper prices dipped amid global growth concerns, particularly related to the U.S. and Chinese economies. Overall, these developments highlight the importance of monitoring central bank actions and economic data for potential implications on financial markets and investment decisions.