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Gold prices surged to a new record high in Asian trading, fueled by optimism surrounding recent U.S. interest rate cuts. Investors also exhibited caution ahead of a series of economic events this week, which further supported the yellow metal’s rise.
Spot gold climbed 0.3% to reach a historic high of $2,631.19 per ounce, while gold futures increased by 0.4% to $2,655.80 per ounce, building on last week’s momentum following the Federal Reserve’s interest rate cut. The decline in the dollar and Treasury yields further strengthened the broader metal market.
Fed’s Rate Cut and Its Impact on Gold
The surge in gold prices comes on the heels of the Federal Reserve’s 50 basis point interest rate cut, signaling the start of an easing cycle that analysts predict could reduce rates by as much as 125 basis points this year. This move is positive for gold as it decreases the opportunity cost of holding non-yielding assets and makes the dollar less attractive, enhancing gold’s appeal as a safe haven.
Investors are closely monitoring upcoming economic signals, particularly remarks from several Federal Reserve members, including Chair Jerome Powell, scheduled for the week. Additionally, the Personal Consumption Expenditures (PCE) price index—widely considered the Fed’s preferred inflation gauge—is set to be released on Friday, potentially influencing further rate cut decisions.
Beyond the Fed, market participants are also eyeing central bank meetings in Switzerland and Sweden, which are anticipated to result in interest rate cuts. This trend of easing monetary policy by global central banks is expected to provide additional support to gold prices.
Other Precious Metals Lag Behind
While gold continues its upward trajectory, other precious metals have not followed suit. Platinum futures fell by 0.6% to $974.10 per ounce, and silver futures dipped by 0.2% to $31.430 per ounce.
Copper Prices Gain Amid Chinese Stimulus
In the industrial metals market, copper prices edged higher on Monday, partly influenced by optimism over lower interest rates. Investors are focusing on potential stimulus measures in China, the world’s largest importer of copper, after the People’s Bank of China unexpectedly cut repo rates to inject more liquidity into the economy.
Benchmark copper futures on the London Metal Exchange rose by 0.3% to $9,525.0 per ton, while one-month copper futures increased by 0.3% to $4.3420 per pound. Market participants are also awaiting several purchasing managers index (PMI) readings from around the globe, which will provide more insights into manufacturing activity and could affect copper demand.
Outlook
As global markets brace for more signals from central banks and economic data releases this week, gold appears to remain a preferred asset for investors seeking safety amid uncertainty. However, the trajectory of other metals will likely depend on additional policy measures and economic cues, especially from key players like China and the U.S.
