Investing.com — Gold prices rose in Asian markets on Tuesday, approaching new highs amid growing expectations that the Federal Reserve will start cutting interest rates from September.
However, gold’s gains were limited by a firmer dollar, which strengthened on growing expectations that President Donald Trump will be re-elected.
As of 00:46 ET (04:46 GMT), it was up 0.2% to $2,427.77 an ounce, while August maturities were up 0.1% to $2,432.30 an ounce.
Gold nears record high amid rising expectations of rate cut
Spot prices have fallen to less than $30 from a record high of about $2,450 hit in late May.
Gold’s recent rally has been driven primarily by growing expectations that the Fed will start cutting interest rates by September, following soft inflation figures and somewhat dovish signals from the central bank.
Federal Reserve Chairman Jerome Powell said on Monday he was increasingly confident that inflation was falling. Though he did not directly hint at a rate cut, markets took his comments to mean a rate cut was imminent.
Traders are not fully pricing in an expectation that the Fed will keep rates on hold in September and are now believed to be pricing in nearly a 90% chance of a 25 basis point cut.
Other precious metals rose in line with this thinking, but were mixed on Tuesday, falling 0.3% and gaining 0.2%.
Strong dollar curbs gold price gains, focus on Trump
But gold’s stalled gains have been revved up, especially as the US dollar rebounded from a one-month low this week.
The dollar was mainly buoyed by growing speculation that Trump would be re-elected, coming as the assassination attempt on the former president gave him a huge boost in popularity and put him ahead of Joe Biden in the presidential election.
President Trump is expected to implement more protectionist trade policies, which could spur inflation and support the dollar.
Copper holds steady amid China uncertainty
Among industrial metals, copper prices were flat as growing concerns about China made the outlook unclear.
The London Metal Exchange benchmark fell 0.1% to $9,795.50 a tonne, while one-month contract rose 0.2% to $4.521 a pound.
Weaker than expected economic data from China has cast doubt on the country’s economic recovery and could have a negative impact on copper demand.
Moreover, a Trump presidency could create further trade headwinds for China, further damaging the Chinese economy.
