Investing.com — Gold Prices

Gold prices hit record highs in Asian trade on Tuesday, extending a recent run of gains amid persistent optimism over U.S. interest rate cuts, with focus turning to more upcoming cues this week.

Copper Prices Rise Sharply

Among industrial metals, copper prices rose sharply after the Chinese government announced a barrage of stimulus measures, raising hopes of an economic recovery in the world’s biggest copper importer.

Gold’s Surge to Record Highs

Gold surged to record highs after a bumper rate cut by the Federal Reserve last week. The prospect of further cuts presents more upside for the yellow metal.

Mixed purchasing manager index readings from several major economies also boosted demand for gold, as did continued tensions in the Middle East.

Spot gold rose 0.3% to $2,638.31 an ounce, while gold futures expiring in December rose 0.3% to a peak of $2,660.80 an ounce.

Focus on Future Fed Cues

The yellow metal remained upbeat on the prospect of lower rates, with more cues from the Fed due in the coming days. Several Fed officials expressed support for the recent 50 basis point cut but expect the pace of cuts to slow in the months ahead. Analysts at Citi predict at least 125 bps of cuts by year-end.

More Fed officials are set to speak this week, notably Chair Jerome Powell on Thursday. Attention is also on the PCE price index data— the Fed’s preferred inflation gauge— due on Friday, expected to show inflation above the Fed’s target range.

Lower rates benefit gold as they reduce the opportunity cost of investing in non-yielding assets. The dollar and Treasury yields sank after the Fed’s decision, enabling more gains in gold.

Other precious metals rose on Tuesday but mostly lagged gold. Platinum futures rose 1.1% to $971.20 an ounce, while silver futures rose 1.1% to $31.430 an ounce.

Copper’s Response to Chinese Stimulus

Benchmark copper futures on the London Metal Exchange rose 1.6% to $9,702.50 a ton, with one-month copper futures surging 2.1% to $4.4380 a pound.

China announced significant stimulus measures on Tuesday, including a 50 bps cut in bank reserve requirements and rate cuts for existing mortgages, ramping up hopes for improved economic growth and increased copper demand.

However, mixed purchasing managers index readings globally limited copper’s ascent, indicating a decline in manufacturing activity.