Gold prices reach historic highs above $2,500 as rate cut anticipation rise

Gold prices held steady in Asian trade on Wednesday, after reaching record highs earlier this week as the possibility of lower US interest rates hurt the dollar and fueled additional flows into the yellow metal.

Broader metal prices also rose, helped by a weaker dollar and dropping Treasury yields, though their gains halted amid a broader risk-off trend in markets.

Spot gold increased 0.1% to $2,515.44 per ounce, while December gold futures rose 0.1% to $2,553.35 per ounce at 00:51 ET (04:51 GMT). On Tuesday, spot prices rose to a record high of $2,531.72 per ounce.

Gold boosted by rate cut bets; Powell, Fed minutes in spotlight.

 
Gold and other commodity prices were boosted mostly by persisting expectations that the Federal Reserve will begin reducing interest rates in September.

Traders were split on whether to cut by 25 or 50 basis points, according to CME Fedwatch.

The focus this week is on Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday, when he is likely to strengthen the Fed's dovish stance. However, economists do not expect Powell to expressly forecast any prospective rate reduction.

The Fed's minutes from its late-July meeting are also due later in the day, after the central bank struck a dovish tone during the meeting.

Lower interest rates benefit gold because they minimize the opportunity cost of investing in non-yielding assets.

This assumption, combined with recent dollar weakness, was a significant driver of metal market advances. However, the majority of this buying was focused toward gold, with other precious metals posting minor rises.

Platinum futures declined 0.1% to $956.25 per ounce, while silver futures increased 0.1% to $29.538.

Copper prices remain stable as markets anticipate more demand from China.

 
Copper prices increased marginally on Wednesday, extending their recovery from recent lows on signs of improved demand in main importer China.

Benchmark copper futures on the London Metal Exchange increased 0.4% to $9,222.50 per ton, while one-month copper futures advanced 0.2% to $2,554.10 per pound.

Data released earlier this week showed that China's copper exports decreased in July as local customers took advantage of recent price declines.

The data indicated that Chinese copper demand had improved following two consecutive months of declining copper imports.

However, concerns of continued economic weakness in China restrained total copper advances, considering that the world's largest copper importer has been battling to recover from COVID for almost two years.