Investing.com — Gold prices rose in Asian trading Thursday, staying within sight of record highs as traders bet the yellow metal will continue to benefit from a lower interest rate environment.
But bets on a massive rate cut by the Federal Reserve fell sharply after consumer price index inflation figures for August appeared higher than expected. Traders were seen positioning for a smaller cut of 25 basis points later in September – an idea that boosted the dollar and limited gold’s advance.
rose 0.2% to $2,516.88 per ounce, while the December expiration rose 0.1% to $2,544.55 per ounce at 00:36 ET (04:36 GMT).
Gold remains stuck below record highs as the Fed props up PPI inflation
Spot gold was trading just below a record high of $2,532.05 an ounce after coming within striking distance of the level earlier this week.
The yellow metal benefited from increased safe-haven demand last week, especially as fears of a US recession hit risk-driven markets.
On Wednesday, traders largely saw back expectations of a 50 basis point rate cut at next week’s Fed meeting, with the central bank now expected to cut rates by 25 basis points, it showed.
Persistent inflation gives the Fed less incentive to cut interest rates sharply.
Before next week’s meeting, markets will also have to deal with inflation data, due later on Thursday.
However, the prospect of lower interest rates still presents a positive scenario for gold and precious metals as it lowers the opportunity cost of investing in non-performing assets.
rose 0.4% to $961.85 per ounce, while the price rose 0.4% to $29.047 per ounce.
Copper is higher on hopes for some Chinese stimulus measures
Among industrial metals, copper prices rose on Thursday, reversing some recent losses, after a slew of weak Chinese economic data boosted expectations of more stimulus at the world’s top copper importer.
The benchmark on the London Metal Exchange rose 0.4% to $9,180.0 per tonne, while the index rose 0.3% in one month to $4,180 per pound.
A slew of weak economic data from China hurt copper prices last week as traders feared a slowdown in the country would hit copper appetite. Chinese copper imports also fell for the third month in a row.
But this raised hopes for more stimulus measures in the country. Citi analysts recently wrote in a note that the government is likely to implement more rate cuts and mortgage refinancing measures to support slowing growth and local demand.
