Gold prices hover near record highs amid receding recession fears

Gold prices fell slightly in Asian trade on Friday as fading worries of a recession reduced safe haven demand, but persisting predictions of interest rate reduction maintained the yellow metal at record highs.

Prices were also on track for a marginally positive week, while overall gains were capped by speculators anticipating a lesser interest rate decrease in September.

Spot gold declined 0.1% to $2,453.02 an ounce, while December gold futures fell 0.1% to $2,490.15 an ounce at 01:08 ET (05:08 GMT).

Gold is expected to rise weekly despite bets on rate cuts

 
Spot prices were up 0.9% for the week and were approximately $30 short of a new high.

Soft inflation statistics given earlier this week encouraged increasing betting that the Federal Reserve will lower interest rates in September, however a month-on-month uptick in consumer inflation shifted traders' expectations to a 25 basis point decrease rather than a 50 basis point cut.

Stronger-than-expected retail sales statistics also increased confidence in the US economy, lowering expectations for a larger rate decrease.

However, the potential of reduced interest rates is still positive for gold, as it reduces the opportunity cost of investing in non-yielding assets.

Persistent concerns about a full-fledged conflict in the Middle East between Iran and Israel kept some safe haven demand for gold alive.

Alpine Macro researchers advised investors to buy gold in anticipation of worsening Middle Eastern conditions, particularly as Iran prepares to respond against Israel for the death of a Hamas commander in Tehran.

Other precious metal prices dropped on Friday, but they were also holding gains this week.

Platinum futures declined 0.5% to $957.85 per ounce, while silver futures slid 0.7% to $28.207 per ounce.

Copper slips down, but the Escondida strike brings weekly gains

Copper prices slipped marginally on Friday, but were expected to rise for the first time in six weeks after a strike at the world's largest copper mine raised concerns about supply.

The benchmark copper futures on the London Metal Exchange declined 0.2% to $9,128.0 per ton, while one-month copper futures fell 0.1% to $4.1368 a pound. Both contracts were up around 3% for the week, snapping a five-week losing streak.

Workers at Chile's Escondida mine, which accounts for 5% of world copper production, went on strike this week over compensation issues.

Any lengthy production problems at Escondida indicate a tighter outlook for global copper supplies, which is expected to strengthen prices.

However, larger advances in copper were hampered by lingering concerns about sluggish copper demand, particularly following a string of dismal economic readings from China, the world's largest copper importer.