Gold prices surged in Asian trading on Thursday, remaining close to record highs due to a weakening dollar and increasing expectations of U.S. interest rate cuts. The precious metal also benefited from safe haven demand as reports indicated potentially worsening trade relations between the U.S. and China.
Spot gold rose by 0.3% to $2,466.18 per ounce, while gold futures for August delivery increased by 0.4% to $2,469.55 per ounce by 00:58 ET (04:58 GMT). Spot prices had previously reached a record high of $2,483.78 per ounce. Gold has seen significant gains over the past three sessions, driven by soft U.S. inflation data and dovish comments from the Federal Reserve, which have increased bets on an interest rate cut. Traders are currently pricing in a 94% chance of a 25 basis point rate cut in September, with a small chance of a 50 basis point cut according to CME Fedwatch.
This expectation has weakened the dollar, bringing it to a near four-month low and benefiting commodities priced in the dollar. Additionally, gold’s safe haven demand was bolstered by a Bloomberg report suggesting the U.S. is considering stricter trade restrictions on China, particularly targeting the country’s technology and chipmaking sectors. Such measures could provoke Beijing and potentially reignite a trade war between the two countries. Comments from U.S. Republican presidential candidate Donald Trump, suggesting that Taiwan should pay for U.S. defence supplies, also kept concerns over China in focus.
Other precious metals followed gold’s upward trend. Platinum futures increased by 0.2% to $1,011.75 per ounce, while silver futures rose by 0.7% to $30.573 per ounce. Conversely, copper prices declined due to concerns over China. The country, being the world’s largest copper importer, faces economic headwinds that negatively impact copper demand. Benchmark copper futures on the London Metal Exchange fell by 0.2% to $9,613.50 per tonne, while one-month copper futures decreased by 0.4% to $4.3985 per pound.
In addition to trade concerns, copper markets are grappling with weak economic data from China. Recent gross domestic product data showed the Chinese economy grew less than expected in the second quarter. Attention is now on the Third Plenum of the Chinese Communist Party, with increasing pressure on Beijing to implement more economic stimulus.
The rising gold prices highlight the impact of U.S. interest rate cut expectations and geopolitical tensions on the market. While precious metals gain from these developments, industrial metals like copper face challenges due to economic uncertainties in China. The market’s focus will remain on how these dynamics unfold in the coming months.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
