Gold prices saw an uptick during Asian trading on Tuesday, nearing new highs as market expectations grow for a Federal Reserve interest rate cut as early as September.
Spot gold increased by 0.2%, reaching $2,427.77 per ounce, while August futures rose 0.1% to $2,432.30 an ounce by 00:46 ET (04:46 GMT). This brings prices within $30 of the record high of approximately $2,450 set in late May.
The recent rise in gold prices has been driven primarily by soft inflation data and dovish signals from the Fed, bolstered by comments from Fed Chair Jerome Powell on Monday, who expressed growing confidence in declining inflation. While Powell did not explicitly indicate a rate cut, his remarks led markets to believe one is imminent, with CME Fedwatch showing nearly a 90% probability for a 25 basis point cut in September.
Despite gold’s gains, the dollar’s resilience has somewhat capped the yellow metal’s advance. Speculation surrounding Donald Trump’s potential second presidential term has strengthened the greenback, especially following a failed assassination attempt that appears to have boosted Trump’s popularity in the polls, positioning him ahead of Joe Biden. Analysts believe Trump’s protectionist trade policies could lead to increased inflation, further supporting the dollar.
In the precious metals market, while gold advanced, platinum futures fell by 0.3% and silver futures gained 0.2%.
In industrial metals, copper prices remained steady amid concerns about China’s economic recovery, with benchmark copper futures on the London Metal Exchange down 0.1% to $9,795.50 per tonne, while one-month copper futures rose 0.2% to $4.521 per pound. Weaker-than-expected GDP data from China raises doubts about future copper demand, and a potential Trump presidency may pose additional trade challenges for China.
