Gold Prices Climb as Powell’s Comments Fuel Rate Cut Speculation

Gold prices continued their upward trend in Asian trading on Thursday, buoyed by a weaker dollar and declining Treasury yields as expectations of U.S. interest rate cuts gained momentum. The precious metal also benefited from reports of central banks in emerging markets increasing their gold reserves and dovish comments from Federal Reserve Chair Jerome Powell.

Key Points:

• Gold Nears Record High: Spot gold rose 0.4% to $2,381.73 an ounce, while gold futures expiring in August increased 0.3% to $2,386.75 an ounce. The yellow metal is trading less than $100 below its all-time high.
• Powell’s Comments Fuel Rate Cut Expectations: Powell’s remarks on progress towards lowering inflation and the possibility of rate cuts even before reaching the 2% target have further solidified market expectations of a September rate cut. The CME Fedwatch tool now indicates a 72.5% probability of a 25 basis point cut.
• Focus Shifts to CPI Data: Powell’s comments have weakened the dollar and shifted focus to upcoming consumer price index (CPI) data, which is expected to show a slight easing of inflation.
• Other Precious Metals Mixed: Platinum futures experienced a minor decline, while silver futures rose, with the latter outperforming gold in recent months. Analysts at TD Securities predict further gains for gold due to increased central bank buying and greater clarity on U.S. interest rate cuts.
• Copper Prices Rise, China Data Awaited: Copper prices also rose, benefiting from a softer dollar. However, the red metal has faced losses in recent sessions due to underwhelming economic data from China, the top importer. Traders are now eagerly awaiting Chinese trade data, expected on Friday, for further insights into the country’s economic health.

In summary, gold prices continue to climb as market participants anticipate a potential rate cut by the Federal Reserve, driven by Powell’s dovish comments and expectations of easing inflation. The precious metal’s upward trajectory is further supported by increased central bank buying. Meanwhile, copper prices are recovering from recent losses, but market sentiment remains cautious as traders await further economic cues from China.