Sep 24 2024: Gold prices surged to new record highs in Asian trading on Tuesday, continuing a recent upward trend driven by expectations of U.S. interest rate cuts, while traders anticipate further market cues later this week.
In the industrial metals sector, copper prices saw a sharp rise after China introduced a series of stimulus measures, boosting hopes of an economic recovery in the world’s largest copper importer.
Gold extended its gains following the Federal Reserve’s substantial rate cut last week, with the possibility of additional cuts providing further support for the precious metal.
Mixed purchasing manager index (PMI) readings from key global economies, alongside ongoing geopolitical tensions in the Middle East, also helped fuel demand for gold.
Spot gold climbed 0.3% to $2,638.31 per ounce, while gold futures for December delivery rose 0.3%, reaching a peak of $2,660.80 per ounce.
Gold Remains Strong as Fed Cues Awaited
Gold remained buoyant on the expectation of lower U.S. interest rates, with attention turning to more Federal Reserve guidance due this week.
Several Fed officials backed last week’s 50-basis-point rate cut on Monday, though they signaled that the pace of future cuts could slow. Analysts at Citi, however, forecast at least 125 basis points in rate reductions by year-end.
More Fed officials, including Chair Jerome Powell, are set to speak later this week, with Powell’s address scheduled for Thursday.
Investors are also eyeing Friday’s release of the PCE price index— the Fed’s preferred measure of inflation—expected to show inflation remained above the central bank’s target in August.
Lower interest rates tend to benefit gold, as they reduce the opportunity cost of holding non-yielding assets like the yellow metal. The Fed’s decision last week caused both the dollar and Treasury yields to decline, further boosting gold prices.
Other precious metals also advanced on Tuesday, though they lagged behind gold. Platinum futures increased by 1.1% to $971.20 per ounce, and silver futures rose 1.1% to $31.43 per ounce.
Copper Prices Surge on China’s Stimulus Measures
Copper prices rallied on Tuesday, with benchmark futures on the London Metal Exchange gaining 1.6% to $9,702.50 per ton, and one-month copper futures jumping 2.1% to $4.4380 per pound.
China, the world’s largest copper importer, unveiled a series of stimulus measures, including a 50-basis-point reduction in bank reserve requirements and lower interest rates for existing mortgages.
These initiatives have raised hopes for improved economic growth in China, which is expected to drive higher demand for copper.
However, mixed PMI data from several countries indicated a decline in global manufacturing activity, limiting copper’s overall gains.
