Gold Prices Update

Gold prices fell slightly in Asian trade on Tuesday, but remained close to record highs amid expectations of a significant interest rate cut by the Federal Reserve this week.

The yellow metal hit a record high on Monday and traded just below those levels as traders priced in a 50 basis point rate cut by the Fed scheduled for Wednesday. Gold’s strength came on the back of weakness in the dollar and Treasury yields.

Spot gold fell 0.2% to $2,578.03 an ounce, while gold futures for December decreased by 0.1% to $2,605.05 an ounce by 23:56 ET (03:56 GMT).

Gold Benefits from Rate Cut Bets

Spot prices reached a record high of $2,589.69 an ounce on Monday, as the dollar weakened due to expectations of a larger rate cut. The Federal Reserve is set to conclude a two-day meeting on Wednesday.

Traders indicate a 68% probability that the Fed will cut rates by 50 basis points at this meeting, with a 32% chance of a 25 basis point cut, according to CME Fedwatch.

Lower interest rates are favorable for gold and other precious metals, as they reduce the opportunity cost of holding non-yielding assets. The Fed is expected to signal the beginning of an easing cycle this week, potentially leading to a reduction of over 100 basis points by the year’s end.

The yellow metal has also seen increased central bank buying this year, particularly in emerging markets, leading to stronger performance compared to other precious metals.

Platinum futures advanced 0.2% to $990.50 an ounce, while silver futures steadied around $31.145 an ounce.

Copper Prices and China

In the industrial metals sector, copper prices rose slightly on Tuesday, benefiting from a weaker dollar and anticipated lower interest rates.

However, gains were tempered by ongoing concerns over China’s economy following weak economic data for August.

Benchmark copper futures on the London Metal Exchange climbed 0.1% to $9,388.50 a ton, while one-month copper futures increased by 0.3% to $4.2770 a pound.

Weak economic readings from China raised expectations that the government will need to introduce further stimulus measures to bolster the economy.