July 16 2024: Gold prices rose in Asian trade on Tuesday, nearing record highs amid increased bets that the Federal Reserve will begin cutting rates from September.
However, gains in gold were tempered by some resilience in the dollar, as increased speculation that Donald Trump will win a second term as president boosted the greenback.
Spot gold rose 0.2% to $2,427.77 an ounce, while gold futures expiring in August increased by 0.1% to $2,432.30 an ounce by 00:46 ET (04:46 GMT).
Gold Close to Record High as Rate Cut Bets Grow
Spot prices are now less than $30 away from a record high of approximately $2,450, reached in late May.
The yellow metal’s recent advance has been fueled chiefly by increased bets that the Fed will begin cutting rates by September, following soft inflation readings and somewhat dovish signals from the central bank.
Fed Chair Jerome Powell stated on Monday that the bank had gained increased confidence that inflation was decreasing. Although he did not directly indicate a rate cut, markets interpreted his comments to mean that a cut was imminent.
Traders are now pricing in a nearly 90% chance for a 25 basis point cut in September, according to CME Fedwatch, entirely pricing out expectations that the Fed will keep rates steady.
Other precious metals advanced on this notion but had mixed performances on Tuesday. Platinum futures fell 0.3%, while silver futures rose 0.2%.
Dollar Resilience Limits Gold Gains, Trump in Focus
A recovery in the dollar stalled gold’s advance, especially as the greenback rebounded from a one-month low this week.
The dollar was supported mainly by increased speculation that Trump will secure a second term. This speculation was fueled by a failed assassination attempt on the former president, which appeared to have greatly boosted his popularity, putting him ahead of Joe Biden in the presidential race.
Trump is expected to enact more protectionist trade policies, which could potentially increase inflation and support the dollar.
Copper Steady Amid China Jitters
Among industrial metals, copper prices remained flat as the outlook for the red metal was clouded by growing concerns over China.
Benchmark copper futures on the London Metal Exchange fell 0.1% to $9,795.50 a tonne, while one-month copper futures rose 0.2% to $4.521 a pound.
Weaker-than-expected GDP data from China cast doubts over an economic recovery in the country, which could bode poorly for its copper demand.
Additionally, a Trump presidency could present more trade headwinds for China, further denting its economy.
