Gold prices climbed during Asian trading on Thursday, continuing their upward trajectory this week as weak economic data bolstered expectations for interest rate cuts by the Federal Reserve, thereby weakening the dollar.
The precious metal has seen substantial gains this week, with traders increasingly betting on the Fed beginning rate cuts in September. This sentiment was further supported by the Bank of Canada’s recent rate cut and the anticipated rate cut by the European Central Bank, contributing to optimism about looser monetary conditions globally.
Despite an improved broader risk appetite, spot gold rose 0.6% to $2,370.40 an ounce. In contrast, gold futures expiring in August declined by 0.6%, trading at $2,389.70 an ounce as of 01:07 ET (05:07 GMT).
Gold Nears Record High Amid Rate Cut Anticipation
Spot gold is now trading less than $100 below the record high reached in May. Unlike the surge in May, which was driven by geopolitical concerns following the helicopter crash that killed Iranian President Ebrahim Raisi, the current rally is propelled by expectations of lower interest rates in the U.S., creating a more favorable environment for gold investment.
The market has increased its bets on a September rate cut by the Fed following a series of weak U.S. economic reports this week. The upcoming nonfarm payrolls data on Friday is also expected to influence these expectations. Meanwhile, the Fed is anticipated to keep rates steady in its meeting next week.
Other Precious Metals and Industrial Metals Performance
In addition to gold, other precious metals saw gains. Platinum futures increased by 0.6% to $1,008.55 an ounce, while silver futures rose 1.6% to $30.552 an ounce.
Among industrial metals, copper prices rebounded from a one-month low on Thursday, benefiting from a weaker dollar. Benchmark copper futures on the London Metal Exchange rose 1.5% to $10,074.50 a tonne, and one-month copper futures increased by 0.5% to $4.6490 a pound.
However, sentiment towards copper remains fragile, particularly as optimism about an economic recovery in China, the top importer, has diminished in recent weeks. Key trade data from China, expected on Friday, will likely provide further direction.
