Investing.com– In Asian trade on Wednesday, gold prices continued their record-breaking streak as optimism over lower U.S. interest rates weighed on the dollar. The market is eagerly awaiting more cues on the U.S. economy in the coming days.
Meanwhile, copper prices slightly dipped after reaching two-month highs due to hopes for more stimulus measures in China, the world’s top importer of industrial metals.
The broader metal market was lifted by the dollar’s recent decline to a 14-month low following the Federal Reserve’s interest rate cut last week. The central bank’s decision to begin an easing cycle, with further rate cuts expected in the coming months, has boosted metal prices.
Gold rose by 0.3% to a record high of $2,670.52 per ounce, while December futures hit a peak of $2,694.75 per ounce.
Gold Surges on Rate Cut Expectations; More Insights Awaited
The anticipation of lower interest rates has been a major driver for gold prices, as investors foresee reduced opportunity costs for holding non-yielding assets.
This week, a number of Fed speakers will provide more insights on interest rates, with a key address by Fed Chair Jerome Powell scheduled for Thursday. Additionally, the release of inflation data on Friday will play a crucial role in shaping the central bank’s rate decisions.
Analysts from Citi predict a total rate cut of 125 basis points, while Goldman Sachs expects gradual cuts of 25 basis points at each meeting until June 2025.
The weakened dollar, due to expectations of lower rates, has further supported gains in precious metals. Gold has also seen increased safe-haven demand amidst escalating tensions in the Middle East.
Other precious metals saw slight declines on Wednesday but have also recorded significant gains in recent sessions. Silver fell by 0.1% to $988.80 per ounce, while platinum dropped by 0.5% to $32.267 per ounce.
Copper Prices Show Mixed Performance as China Stimulus Boosts Sentiment
Benchmark copper on the London Metal Exchange rose by 0.3% to $9,858.50 per ton, while one-month copper futures fell by 0.2% to $4.5158 per pound. Both contracts reached over two-month highs.
Copper experienced a strong rally on Tuesday following China’s announcement of additional monetary stimulus measures to support economic growth. Traders are optimistic that this will drive demand for copper in the country.
However, analysts suggest that Beijing needs to implement more measures, particularly on the fiscal front, to bolster growth further.
Overall, the financial markets are closely monitoring developments in interest rates, economic data, and geopolitical tensions, all of which are impacting metal prices. Investors should stay informed and consider diversifying their portfolios to mitigate risks and capitalize on potential opportunities in the market.
