Gold prices rise, record highs close as CPI data fuels rate cut bets

Gold prices edged higher in Asian trading on Thursday, hovering near record levels as weaker-than-expected U.S. consumer inflation data fueled expectations that the Federal Reserve may soon start cutting interest rates.

However, gains in the precious metal were somewhat limited by improved risk appetite among investors. Additionally, a monthly increase in the consumer price index (CPI) led traders to anticipate a smaller rate cut in September.

By 01:05 ET (05:05 GMT), spot gold had risen 0.2% to $2,452.56 per ounce, while gold futures climbed 0.4% to $2,490.40 per ounce.

Gold Near Record Highs, September Rate Cut in Focus Spot gold prices approached a record high of over $2,480 earlier this week, supported by increased demand for safe-haven assets amid escalating geopolitical tensions in the Middle East.

However, gold initially reacted negatively to the CPI data released on Wednesday, as the month-on-month inflation increase led traders to favor a smaller, 25 basis point rate cut by the Federal Reserve in September, according to the CME FedWatch tool. Previously, traders were divided between expecting a 25 bps or a 50 bps cut, with the latter being more favorable for the metal markets.

Despite this, the overall outlook for gold remains positive as the potential for lower interest rates is seen as beneficial for the metal, reducing the opportunity cost of holding non-yielding assets like gold. This outlook, along with declines in the U.S. dollar and Treasury yields, kept gold prices close to their recent highs.

Other precious metals also saw gains on Thursday. Platinum futures increased by 0.5% to $935.65 per ounce, while silver futures rose by 1.6% to $27.773 per ounce.

Copper Rises Amid Mixed Chinese Data In the industrial metals sector, copper prices increased on Thursday, buoyed by some positive economic data from China, the world’s largest copper importer, although the metal is still recovering from recent significant losses.

Benchmark copper futures on the London Metal Exchange rose 0.5% to $8,991.50 per ton, while one-month copper futures gained 0.5% to $4.065 per pound.

Chinese economic data showed an improvement in consumer spending, with retail sales growing more than expected in July. However, industrial production, a key driver of China’s copper demand, grew less than anticipated, and fixed asset investment also fell short of expectations. Additionally, China’s unemployment rate unexpectedly increased.

Concerns about slowing demand from China have led to steep losses in copper prices over the past month, particularly as recent data revealed that China’s copper imports have declined for two consecutive months.