Gold prices edged lower in Asian trading on Tuesday, pressured by a strengthening U.S. dollar. However, the possibility of upcoming interest rate cuts and increased demand for safe-haven assets kept the precious metal near its recent highs.
In the industrial metals sector, copper prices continued their rebound, buoyed by expectations that lower interest rates could stimulate a demand recovery in the coming months, offsetting weakening demand from China.
Spot gold declined by 0.4% to $2,507.15 per ounce, while gold futures for December delivery fell by 0.5% to $2,542.05 per ounce as of 00:54 ET (04:54 GMT).
Gold Nears Record Highs Amid Rate Cut Speculation
Despite the dip, gold prices remain close to the record high of approximately $2,532 per ounce, reached earlier in August. The demand for gold has been driven by growing confidence that the Federal Reserve may start cutting interest rates in September, following dovish signals from the central bank.
However, market sentiment remains divided, with traders uncertain whether the Fed will opt for a 25 or 50 basis point reduction, according to the CME FedWatch tool. The upcoming release of the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation, is expected to provide further clarity.
Lower interest rates are generally favorable for gold, as they reduce the opportunity cost of holding non-yielding assets like gold.
Rising geopolitical tensions have also bolstered gold’s appeal as a safe-haven asset. Ongoing ceasefire talks between Israel and Hamas have shown little progress, while clashes between Ukraine and Russia persist. Additionally, a growing conflict in Libya between eastern and western forces has driven up oil prices, adding to market anxiety.
Dollar Rebound Pressures Other Precious Metals
The broader precious metals market also faced headwinds on Tuesday as the dollar rebounded from a 13-month low. Platinum futures fell by 0.7% to $961.15 per ounce, and silver futures dipped 0.5% to $30.30 per ounce.
