Gold prices in Asian trading surged on Friday, approaching record highs as turmoil in global markets, coupled with concerns about an economic slowdown, intensified safe-haven demand for the precious metal.
This week, bullion has seen significant price gains, driven by expectations of U.S. interest rate cuts that have weakened the dollar and reduced Treasury yields. Heightened tensions in the Middle East following the recent killing of a Hamas leader have further boosted safe-haven buying of gold.
Spot gold climbed by 0.5% to reach $2,458.49 per ounce, while gold futures expiring in December experienced a 0.9% increase, reaching $2,502.60 per ounce at 01:18 ET (05:18 GMT).
Gold is on track for substantial weekly gains, with spot prices poised to close over 3% higher, marking their best performance since March. The yellow metal has been a beneficiary of safe-haven demand, particularly as weak U.S. purchasing managers index and employment data raised concerns about a potential economic slowdown in the world’s largest economy.
The recent data led to significant declines on Wall Street, which spilled over into Asian markets, prompting a widespread risk-off sentiment and fueling increased safe-haven interest in gold.
Following the Federal Reserve’s indication of a potential interest rate cut in September, markets have largely priced in a 25 basis point reduction for the month. All eyes are now on the forthcoming nonfarm payrolls data for further insights into the U.S. economy, with a weakening labor market potentially reinforcing expectations of Fed rate cuts.
Lower interest rates typically bode well for precious metal prices by reducing the opportunity cost of investing in non-yielding assets. Additionally, platinum futures rose by 0.7% to $977.25 per ounce, while silver futures surged by 1.6% to $28.925 per ounce.
In contrast, copper prices rebounded slightly on Friday but were on track for a fourth consecutive week of losses amid growing apprehensions that a global economic slowdown could dampen demand. Benchmark copper futures on the London Metal Exchange edged up by 0.2% to $9,073.0 per tonne, while one-month copper futures rose by 0.6% to $4.0900 per pound. Both contracts were down marginally for the week, heading towards their fourth straight week of losses, with concerns amplified by weak PMI readings from both the U.S. and China indicating a slowdown in manufacturing activity.
