Gold Prices Rise as Traders Await Fed Decision
Gold prices rose slightly in Asian trade on Wednesday, keeping recent record highs in sight as traders anticipated how drastically the Federal Reserve would cut interest rates.
Bullion prices briefly hit record highs this week amid increasing expectations for a 50 basis point cut, impacting the dollar and Treasury yields. However, some stronger-than-expected U.S. data complicated forecasts for a large rate cut.
Spot gold rose 0.2% to $2,574.15 an ounce, while gold futures increased 0.3% to $2,600.40 an ounce by 00:16 ET (04:16 GMT).
Gold Just Below Record Highs with Rate Cuts in Focus
Spot prices were just shy of a record high of $2,589.78 an ounce reached earlier this week.
Gold’s main support came from the growing belief that the Fed would cut interest rates during a meeting later on Wednesday.
Markets were previously divided over whether to expect a 25 or 50 basis point cut, but the CME Fedwatch showed expectations shifting toward a 50 bps reduction in recent sessions.
Bets on a 50 bps cut held firm even as retail sales and inflation data outperformed expectations, showcasing some resilience in the U.S. economy.
Despite concerns over a weakening labor market, the Fed is expected to initiate an easing cycle that could lower interest rates by at least 100 bps by the end of 2024.
Lower rates benefit gold and other precious metals, as they reduce the opportunity cost of investing in non-yielding assets.
However, other precious metals lagged, with platinum futures dropping 0.5% to $983.90 an ounce and silver futures decreasing 0.5% to $30.837 an ounce.
Copper Slides as China Markets Reopen
In industrial metals, copper prices fell on Wednesday as markets in top importer China reopened after a long weekend, with local traders responding to more weak economic data from the country.
Benchmark copper futures on the London Metal Exchange decreased by 0.6% to $9,326.50 a ton, while one-month copper futures fell 0.9% to $4.2475 a pound.
Weak industrial production and retail sales data from China released over the weekend indicated ongoing challenges in the country’s primary economic sectors, raising concerns about its appetite for copper.
Nonetheless, these weak readings spurred some speculation that Beijing would be compelled to introduce further stimulus measures, potentially boosting near-term growth and copper demand, which helped limit overall losses in copper.
Comments (0)