Aug 23 2024: Gold prices edged higher in Asian trading on Friday but continued to recover from a sharp drop after hitting record highs earlier in the week. Investors exercised caution ahead of Federal Reserve Chair Jerome Powell’s speech, which provided some support to the U.S. dollar.
Earlier this week, gold surged to record levels amid growing confidence that the Federal Reserve will begin cutting interest rates starting in September. While the market saw some profit-taking that led to a retreat in prices, gold remained relatively strong.
As of 01:24 ET (05:24 GMT), spot gold rose by 0.4% to $2,495.52 an ounce, and December gold futures increased by 0.6% to $2,530.70 an ounce. Despite the recent dip, spot prices were slightly down for the week after reaching a record high of $2,531.72 an ounce.
Powell’s Speech in Focus Amid Rate Cut Speculation
Powell is expected to address the Jackson Hole Symposium later on Friday, potentially offering further insights into the Fed’s plans to reduce interest rates. Markets are broadly anticipating a rate cut in September, though opinions vary on whether the reduction will be 25 or 50 basis points, as indicated by CME Fedwatch data.
Speculation around a more substantial rate cut was fueled by soft labor data released earlier in the week, which showed a significant downward revision in payroll data up to March 2024. This revision suggested that the recent signs of cooling in payroll growth were more pronounced than initially believed, heightening concerns about a slowing U.S. economy.
The prospect of slower economic growth and lower interest rates supports gold’s appeal as a safe-haven asset. Additionally, lower rates reduce the opportunity cost of holding non-yielding bullion.
Other Precious Metals and Copper See Gains
On Friday, other precious metals also saw gains but remained cautious after a mixed weekly performance. Platinum futures rose by 0.7% to $959.75 an ounce, while silver futures increased by 0.9% to $29.290 an ounce.
Copper prices climbed on Friday, heading for a second consecutive week of gains as the metal continued to recover from lows earlier in August. Benchmark copper futures on the London Metal Exchange increased by 0.8% to $9,204.50 per ton, while one-month copper futures rose by 0.7% to $4.1655 per pound. Both contracts posted weekly gains between 0.5% and 1%.
Copper’s two-week rebound was supported by bargain buying and improving sentiment towards China, the world’s top copper importer. Additionally, markets are betting that lower U.S. interest rates will bolster global demand for copper.
