Gold Prices Reach New Heights

Gold prices continued to soar in Asian trade on Wednesday, driven by ongoing optimism regarding lower U.S. interest rates, impacting the dollar ahead of upcoming economic indicators.

Copper Prices Dip Amidst Stimulus Optimism

Copper prices slightly decreased after reaching two-month highs, influenced by the anticipation of additional stimulus from China, the leading importer.

Broader metal prices benefited from a falling dollar, which dropped to a 14-month low following a recent Federal Reserve interest rate cut and the announcement of an easing cycle expected to drive rates down further.

Spot gold increased by 0.3%, hitting a record high of $2,670.52 an ounce. Meanwhile, gold futures for December escalated to $2,694.75 an ounce.

Impact of Interest Rate Cuts on Gold

The expectation of lower interest rates has been pivotal for gold, as traders consider the decreased opportunity cost for investing in non-yielding assets.

Several Fed officials are scheduled to provide insights on interest rates this week, particularly Chair Jerome Powell’s address on Thursday. Additionally, the PCE price index—the Fed’s preferred inflation measure—will be released on Friday, which could influence future rate decisions.

Analysts from Citi predict a total reduction of 125 basis points by the Fed after last week's 50 basis point cut. Goldman Sachs anticipates 25 basis point cuts at every meeting from November through June 2025.

The anticipation of lower rates pressured the dollar, benefitting precious metals. There was also safe haven demand for gold amid rising tensions in the Middle East due to ongoing conflicts involving Israel, Hamas, and Hezbollah.

Other precious metals experienced slight declines on Wednesday, but remained on strong upward trends. Platinum futures decreased by 0.1% to $988.80 an ounce, while silver futures dropped 0.5% to $32.267 an ounce.

Mixed Copper Prices Amid Chinese Stimulus

On the London Metal Exchange, benchmark copper futures rose by 0.3% to $9,858.50 a ton, while one-month futures fell by 0.2% to $4.5158 a pound, both reflecting over two-month highs.

Copper saw a significant rally on Tuesday due to China's new monetary stimulus aimed at bolstering growth, which traders believe would increase the country’s demand for copper. However, analysts indicated that Beijing needs to implement further fiscal measures to effectively support growth.