Gold prices retreated from record highs in Asian trading on Thursday as the recent rally in the yellow metal cooled, with market attention shifting to U.S. interest rate cuts and rising concerns about a potential recession.
Earlier this week, gold surged to new highs driven by increasing confidence that the Federal Reserve would begin cutting rates in September. However, a combination of profit-taking and a rebound in the dollar caused gold prices to pull back on Thursday.
Spot gold fell by 0.5% to $2,500.55 an ounce, while gold futures for December delivery dropped by 0.4% to $2,547.05 an ounce as of 00:15 ET (04:15 GMT). On Wednesday, spot gold had reached a peak of $2,532.05 an ounce.
Rate Cut Expectations Remain, but Recession Fears Loom
Gold’s recent record highs were supported by the minutes from the Federal Reserve’s late-July meeting, which revealed that most policymakers favored lowering interest rates, citing progress in curbing inflation.
These minutes reinforced expectations of a rate cut in September, although traders are divided on whether the reduction will be 25 or 50 basis points, according to CME FedWatch.
However, a significant downward revision in payroll data for the year ending March 2024, released on Wednesday, reignited fears of a U.S. recession due to a cooling labor market.
While these recession concerns dampened a broader risk-on sentiment in financial markets, gold prices still fell amid some profit-taking, and the dollar recovered from its recent seven-month lows.
All eyes are now on Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole Symposium on Friday for further insights into the economic outlook.
Lower interest rates are generally favorable for gold, as they reduce the opportunity cost of holding non-yielding assets. Other precious metals saw modest gains under this expectation, though they largely followed gold’s trend.
Platinum futures dropped 0.4% to $970.0 an ounce, and silver futures declined 0.3% to $29.448 an ounce.
Copper Slips Amid Global Growth Concerns
In the industrial metals sector, a recovery in copper prices stalled on Thursday due to renewed concerns about slowing economic growth in the U.S. Ongoing worries about a slowdown in China also weighed on the market, despite signs of marginal improvement in copper demand in the country this week.
Benchmark copper futures on the London Metal Exchange remained steady at $9,262.50 per ton, while one-month copper futures fell 0.2% to $4.1930 per pound.
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