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Gold prices continued their upward trajectory, hitting fresh record highs in Asian trading on Thursday. This surge was driven by a weakening dollar, fueled by growing expectations of U.S. interest rate cuts, as well as increasing safe-haven demand due to escalating trade tensions between the U.S. and China.
Spot gold prices jumped 0.3% to reach a new all-time high of $2,466.18 an ounce, while gold futures for August delivery also hit a record high of $2,469.55 an ounce. This remarkable rally has seen gold prices climb over $100 in just three sessions.
The recent rally is primarily attributed to increasing optimism that the Federal Reserve will cut interest rates in September. Soft U.S. inflation data and dovish comments from Fed officials, including Chair Jerome Powell, have solidified these expectations. Traders are now pricing in a 94% chance of a 25 basis point cut, with even a small possibility of a 50 basis point reduction.
The weakening dollar, a result of the anticipated rate cuts, has further bolstered gold’s appeal to investors holding other currencies. Additionally, the precious metal has seen increased safe-haven demand following a Bloomberg report suggesting that the U.S. is considering stricter trade restrictions on China, particularly targeting its technology and chipmaking sectors. These potential restrictions have sparked concerns about a renewed trade war between the two countries, driving investors towards the perceived safety of gold.
Other precious metals have also joined gold’s upward trend, with platinum futures and silver futures both experiencing gains. Silver, in particular, has seen a notable surge in recent months, outperforming gold.
However, the same concerns over a potential U.S.-China trade war and weak economic data from China have negatively impacted copper prices. As the world’s largest copper importer, China’s economic slowdown has dampened the outlook for copper demand, leading to a decline in prices.
Market attention is now focused on the upcoming Third Plenum of the Chinese Communist Party, where pressure is mounting on Beijing to introduce further stimulus measures to support the economy. Investors will be closely watching the developments in China, as well as the Federal Reserve’s monetary policy decisions, for further cues on the future trajectory of gold and other precious metals.
