Gold prices dipped slightly during Asian trading on Friday but remained buoyed by significant gains from the previous session, spurred by softer-than-expected U.S. inflation data that heightened expectations of a potential interest rate cut in September.
The precious metal surged past the critical $2,400 an ounce mark on Thursday, nearing a record high, benefiting from a sharp decline in the dollar. Consequently, gold was on track for a robust weekly performance.
Spot gold slipped 0.3% to $2,408.52 an ounce, while August gold futures also fell 0.3% to $2,413.75 an ounce by 00:06 ET (04:06 GMT).
Strong Weekly Performance for Gold Amid Rate Cut Optimism
Spot prices were poised to gain approximately 0.7% this week, largely due to Thursday’s significant uptick. The U.S. Consumer Price Index (CPI) data released on Thursday showed a slight dip, boosting hopes that cooling inflation could prompt the Federal Reserve to cut interest rates.
This sentiment led to a drop in the dollar and Treasury yields, providing a boost to metal markets. Traders are now pricing in an over 82% chance of a 25 basis point cut in September, up from about 64% last week.
Lower interest rates reduce the opportunity cost of investing in non-yielding assets like gold, as higher rates typically make cash or debt yields more attractive.
Mixed Performance for Other Precious Metals
Other precious metals saw declines on Friday but are also expected to benefit from potential rate cuts. Platinum futures dropped 0.4% to $1,015.10 an ounce, while silver futures decreased by 0.7% to $31.457 an ounce.
Copper Prices Decline Amid Reduced Chinese Imports
Among industrial metals, copper prices fell on Friday following data indicating a reduction in imports to China, the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange declined by 0.3% to $9,761.50 per tonne, while one-month copper futures dropped 0.7% to $4.4977 per pound.
China’s imports of unwrought copper and copper products fell by 3% year-on-year to 436,000 metric tons in June, as reported by government data. This contraction, coupled with a broader decline in Chinese imports, has raised concerns about weak local demand and a sluggish economic recovery.
While China’s trade surplus surged to a near two-year high and exports grew more than expected, increased tariffs on key Chinese exports, such as electric vehicles, could counteract this positive trend.
Attention now turns to the Third Plenum of the Chinese Communist Party, set for next week, for further economic cues and potential stimulus measures.
