July 29 2024: Gold prices climbed in Asian trading on Monday, regaining ground after a decline throughout most of July as attention turned to the upcoming Federal Reserve meeting. The central bank is expected to offer further guidance on potential interest rate cuts.
The yellow metal’s rise was also supported by a weakening dollar, which fell after key inflation data on Friday indicated some easing in U.S. inflation. This scenario boosts the Fed’s confidence in reducing borrowing rates.
Spot gold increased by 0.4% to $2,395.31 per ounce, while gold futures for December delivery rose 0.5% to $2,440.35 per ounce by 00:58 ET (04:58 GMT).
Gold Bolstered by Rate Cut Expectations
The primary driver of gold’s gains was heightened speculation about interest rate cuts, spurred by positive signs from the PCE price index data last week, which is the Fed’s preferred inflation measure.
This week’s Fed meeting is now in sharp focus. While the central bank is expected to keep rates unchanged, any indications of plans to cut rates will be closely monitored.
Traders are almost unanimously predicting a 25 basis point cut in September, according to CME FedWatch.
The prospect of lower rates is favorable for gold, as it reduces the opportunity cost of investing in the metal. High rates have pressured gold prices over the past two years, although increased demand for safe-haven assets has still helped gold reach record highs.
Other precious metals also firmed on Monday, recovering some of their recent losses. Platinum futures rose 0.8% to $953.35 per ounce, while silver futures climbed 0.8% to $28.242 per ounce.
Copper Prices Recover Amid Focus on China
Among industrial metals, copper prices rose on Monday after experiencing significant losses over the past month.
Benchmark copper futures on the London Metal Exchange increased by 0.2% to $9,130.50 per tonne, while one-month copper futures rose 0.4% to $4.1303 per pound.
Copper prices have been under pressure due to growing concerns about top importer China, following a series of weak economic signals and unclear regulatory guidance on additional stimulus measures.
This week, attention is on key purchasing managers index data from China for further insights into business activity.