July 4 2024: Gold prices steadied at a 10-day high in Asian trade on Thursday, supported by growing bets on interest rate cuts by the Federal Reserve, which pulled down the dollar and Treasury yields. However, gold’s advance was tempered by hawkish signals from the minutes of the Fed’s June meeting and anticipation of key nonfarm payrolls data kept traders cautious.
Spot gold rose 0.1% to $2,359.56 an ounce, while gold futures expiring in August fell 0.1% to $2,367.15 an ounce by 00:27 ET (04:27 GMT).
Gold Benefits from Rate Cut Bets, but Caution Persists
The yellow metal marked strong gains on Wednesday, tracking a sharp fall in the dollar as traders increased their bets for a rate cut in September. This trend followed weaker-than-expected ADP employment data and a soft reading on non-manufacturing activity, which pushed up expectations that the U.S. economy was cooling.
The CME FedWatch Tool showed traders pricing in an over 68% chance for a 25 basis point cut in September, up from a 59% chance seen a day ago. Lower rates bode well for non-yielding assets such as gold, given that they diminish the appeal of Treasuries and the dollar.
However, optimism over rate cuts was constrained by hawkish signals from the minutes of the Fed’s June meeting, which showed policymakers were still not confident about lowering lending costs. Caution ahead of key nonfarm payrolls data, which has consistently topped expectations in recent months, also kept sentiment limited. Improved risk appetite saw traders prefer assets such as stocks and currencies.
Other precious metals were mixed. Platinum futures rose 0.7% to $1,019.40 an ounce, while silver futures fell 0.5% to $30.70 an ounce. However, silver had vastly outperformed gold over the past 12 months.
Copper Prices Muted Amid Mixed Economic Cues
Among industrial metals, copper prices were subdued after marking some gains on a softer dollar. However, gains in copper were limited by signs of cooling U.S. economic activity, while weak signals from China also contributed to copper weakness this week.
Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,849.0 a tonne, while one-month copper futures fell 0.1% to $4.5255 a pound. Both contracts were nursing steep losses through June as sentiment over top importer China soured, and global economic growth also appeared to be cooling, which bodes poorly for copper demand.
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