Gold prices rose in Asian trade on Thursday, with traders betting that the yellow metal will benefit from a lower interest rate environment. However, bets on a significant interest rate cut by the Federal Reserve decreased after core consumer price index inflation data came in higher than expected for August. Traders are now expecting a smaller, 25 basis point reduction later in September, which has boosted the dollar and limited gold’s advance.
Gold Stalls Below Record Highs with Fed, PPI Inflation on Tap
Spot gold was trading just below a record high of $2,532.05 an ounce, benefiting from increased safe-haven demand amid fears of a U.S. recession. The Fed is now expected to enact a 25 bps reduction next week, as sticky inflation gives them less impetus to cut interest rates sharply. Markets will also be watching for PPI inflation data due later on Thursday.
Copper Edges Higher on Some China Stimulus Hopes
Copper prices advanced on Thursday, recouping recent losses as weak Chinese economic readings spurred expectations of more stimulus in the world’s biggest copper importer. China’s copper imports fell for a third consecutive month, driving hopes of additional stimulus measures in the country.
Analysis:
The rise in gold prices and copper’s recovery are influenced by expectations of lower interest rates and stimulus measures in response to economic challenges. For investors, this means potential opportunities for profits in precious metals and industrial metals as central banks and governments take action to support economic growth.