Gold Prices Slightly Decline Amid Interest Rate Prospects

Gold prices fell slightly in Asian trade on Monday, yet remained close to last week’s record highs as the anticipation of lower U.S. interest rates weakened the dollar and improved market outlook for metals.

Last week, the yellow metal surged to record levels, gaining traction as traders responded positively to dovish comments from the Federal Reserve. Safe haven demand also supported gold amid unresolved ceasefire talks between Israel and Hamas and ongoing conflicts in the Middle East.

Spot gold decreased by 0.1% to $2,509.88 per ounce, while gold futures for December fell 0.1% to $2,545.10 per ounce as of 00:57 ET (04:57 GMT). Spot prices had reached a record high of $2,532.05 per ounce last week.

Gold Boosted by Rate Cut Expectations and Weak Dollar

The gains in gold coincided with the dollar’s decline to a 13-month low, based on growing sentiment that the Fed would begin reducing rates in September. Comments from Fed Chair Jerome Powell on Friday indicated that these rate cuts were imminent and that further labor market cooling was undesirable.

Lower rates are generally favorable for gold and other precious metals, as they diminish the opportunity cost associated with investing in non-yielding assets.

Other precious metals saw gains last week but also retreated on Monday, with platinum futures down 0.6% to $965.45 per ounce and silver futures down 0.4% to $30.145 per ounce.

Some safe haven demand persisted due to escalating hostilities between Israel and Hezbollah and ongoing fighting between Russia and Ukraine.

Copper Prices Retreat Amid Caution in China

In industrial metals, copper prices edged down on Monday as a rebound from recent lows plateaued, amidst ongoing concerns about slowing demand in China, the largest consumer. Although the prospect of lower rates drew some investment into copper, prices are still recovering from the drops experienced in July and August.

One-month copper futures decreased by 0.1% to $4.2557 per pound, having rebounded sharply over the last week on hopes that lower interest rates would boost global copper demand.