Gold prices advance, rate cuts in focus as CPI data looms

Gold prices rose in Asian trading on Thursday, benefiting from a weaker dollar and declining Treasury yields amid growing speculation about potential U.S. interest rate cuts ahead of key inflation data.

The yellow metal maintained some gains this week, supported by reports of several central banks in emerging markets increasing their gold reserves. Additionally, dovish comments from Federal Reserve Chair Jerome Powell further boosted gold prices.

Spot gold increased by 0.4% to $2,381.73 per ounce, while gold futures for August delivery rose by 0.3% to $2,386.75 per ounce by 00:42 ET (04:42 GMT).

Gold buoyant as Powell comments put CPI data in focus

Gold was trading less than $100 below a record high, as Powell highlighted recent progress in reducing inflation.

The Fed Chair also noted that the central bank did not need inflation to fall below its 2% target before starting to cut rates, although more confidence in inflation easing was still necessary.

Powell’s comments led traders to largely maintain their bets on a September rate cut. The CME FedWatch tool showed a 72.5% chance for a 25 basis point cut in September.

These remarks weakened the dollar and shifted focus to the upcoming consumer price index (CPI) data, due later on Thursday. The CPI reading is widely expected to show a slight cooling in inflation.

Other precious metals had mixed performances on Thursday but also saw gains this week. Platinum futures fell 0.2% to $1,005.25 per ounce, while silver futures rose 0.9% to $31.290 per ounce, with silver having outpaced gold in recent months.

Analysts at TD Securities noted that gold is likely to rise in the near term due to increased central bank buying in emerging markets and more clarity on U.S. interest rate cuts.

Copper rises on softer dollar, more China cues awaited

Among industrial metals, copper prices rose on Thursday, benefiting from a softer dollar. However, the red metal has been experiencing steep losses in recent sessions due to middling economic data from top importer China.

Benchmark copper futures on the London Metal Exchange rose 0.1% to $9,914.50 per tonne, while one-month copper futures increased by 0.5% to $4.6147 per pound.

Copper prices declined earlier this week as inflation data from China largely underwhelmed markets, raising concerns about a slowing economic rebound in the country. Traders are now awaiting trade data from China, due on Friday, for further insights into the country’s economic health.