Gold prices keep record highs in sight as Fed talks rate cuts

Gold prices held steady in Asian trading on Thursday, following a surge close to record highs in the previous session. This surge came after the Federal Reserve indicated the possibility of an interest rate cut in September.

The yellow metal also saw increased safe haven demand amid heightened concerns over a broader conflict in the Middle East, triggered by the killing of Hamas leader Ismail Haniyeh in Tehran.

Spot gold remained stable at $2,446.41 per ounce, while December gold futures rose 0.7% to $2,490.15 per ounce by 01:26 ET (05:26 GMT).

Rate Cut Hopes Boost Gold Prices

Gold prices spiked on Wednesday, approaching a record high of $2,483.78 per ounce after the Fed maintained interest rates, as anticipated. Fed Chair Jerome Powell highlighted progress toward lower inflation and a softer labor market, and explicitly mentioned the possibility of a September rate cut if data remains favorable.

Although the Fed still needs to review additional inflation and labor market data before its next meeting, markets are almost fully anticipating a 25 basis point cut in September, according to CME Fedwatch.

Lower interest rates are beneficial for gold, as they decrease the opportunity cost of holding non-yielding assets. This week, attention is also on the July nonfarm payrolls data, set for release on Friday.

Other Precious Metals

Other precious metals had mixed performances but retained most of their gains from Wednesday. Platinum futures fell 0.2% to $984.40 per ounce, while silver futures rose 0.5% to $29.070 per ounce.

Copper Rebound Stalls on Weak China Data

Industrial metals, in contrast, showed weaker performance, with a rebound in copper prices stalling due to further negative economic signals from China, the top copper importer.

Benchmark copper futures on the London Metal Exchange rose 0.2% to $9,243.50 per tonne, whereas one-month copper futures declined 0.3% to $4.1833 per pound.

Data from China’s purchasing managers’ index indicated a broad slowdown in manufacturing activity. The Caixin manufacturing PMI data showed an unexpected contraction through July, aligning with a government PMI reading from Wednesday.

The Caixin data, which often presents a more positive view of the economy compared to the government PMI, dampened sentiment toward China. Copper prices had rebounded from over five-month lows on Wednesday due to some positive comments from Beijing and hopes for more stimulus. However, Thursday’s data suggested that more substantial support from the government might be needed to bolster the economy.