July 31 2024: Gold prices climbed in Asian trade on Wednesday, boosted by a weaker dollar as traders awaited further signals on interest rate cuts from the Federal Reserve.
The precious metal also saw a rise due to safe-haven buying following reports of Hamas leader Ismail Haniyeh’s death from an Israeli strike in Iran, indicating a potential escalation in conflict.
Spot gold increased by 0.3% to $2,419.11 an ounce, while gold futures for December delivery rose 0.5% to $2,463.85 an ounce by 01:09 ET (05:09 GMT).
Gold Strengthens with Fed Rate Cut Anticipation
Gold broke past the $2,400 an ounce mark as traders moved away from the dollar ahead of the Federal Reserve meeting conclusion later in the day.
The central bank is expected to maintain current interest rates, but traders are closely watching for hints of future rate cuts following softer inflation data and dovish statements from Fed officials.
The consensus anticipates a 25 basis point cut in September. Lower interest rates are beneficial for gold as they reduce the opportunity cost of holding the non-yielding asset.
Middle East Tensions Drive Safe-Haven Buying
Gold and other precious metals gained from safe-haven buying after multiple reports of Haniyeh’s death from an Israeli strike in Tehran.
This development signals a potential escalation in the Israel-Hamas conflict, now in its ninth month with no ceasefire in sight.
The risk of a broader war in the Middle East has increased, with heightened tensions between Iran and Israel following missile exchanges earlier this year. Israel also launched strikes against Iran-backed Hezbollah in Lebanon earlier this week. Among other precious metals, platinum futures rose 0.7% to $976.75 an ounce, while silver futures increased by 0.8% to $28.745 an ounce.
Copper Rebounds on Hopes of China Stimulus
Among industrial metals, copper prices rebounded from near four-month lows due to hopes for more stimulus measures from top importer China, following weak purchasing managers index (PMI) data and positive government comments.
Benchmark copper futures on the London Metal Exchange rose 1.7% to $9,123.50 a tonne, while one-month copper futures increased by 1.1% to $4.1368 a pound.
PMI data showed China’s manufacturing sector contracted for the third consecutive month in July, while non-manufacturing growth slowed.
These figures came after a Politburo meeting where the Chinese government promised more stimulus measures, particularly those aimed at boosting consumer sentiment.
While comments from the Politburo and weak PMI readings have raised hopes for additional stimulus, analysts advised monitoring Beijing’s implementation for further guidance.
