Investing.com — Gold prices rose in Asian markets on Thursday, hovering near record highs as weaker-than-expected U.S. consumer price data raised hopes the Federal Reserve will start cutting interest rates.
Rising risk appetite also capped gains in gold prices, while a monthly rise in inflation led traders to expect a smaller rate cut in September.
As of 01:05 ET (05:05 GMT), it was up 0.2% to $2,452.56 an ounce and up 0.4% to $2,490.40 an ounce.
Gold nears record high, eyeing September rate cut
Spot gold prices have approached record highs of above $2,480 this week as worsening geopolitical tensions in the Middle East have also boosted demand for the asset as a safe haven.
However, gold initially reacted negatively to Wednesday’s CPI data, as inflation rose month-on-month, leading traders to expect a small Fed rate cut of 25 basis points in September. The tool had previously indicated traders were split between a 25 basis point and a 50 basis point cut, with the latter suggesting a more favorable outlook for metals markets.
Still, the prospect of lower interest rates bodes well for gold, as lower interest rates lower the opportunity cost of investing in gold, which has put it back on track from its recent peak. The decline in the dollar and Treasury yields has also caused gold prices to rise.
Other precious metals also rose on Thursday, rising 0.5% to $935.65 an ounce and 1.6% to $27.773 an ounce.
Copper rises amid mixed Chinese data
Among industrial metals, copper prices rose on Thursday on strong economic data from China, the largest importer, but the red metal was still trading significantly lower in recent days.
The London Metal Exchange benchmark rose 0.5% to $8,991.50 a tonne, while one-month contracts added 0.5% to $4.065 a pound.
Data from China showed consumer spending improved slightly, rising more than expected in July.
However, China’s main driver of copper demand, , grew slower than expected, as did . China’s also unexpectedly increased.
Copper prices have fallen sharply over the past month on concerns about slowing Chinese demand, especially after recent data showed Chinese imports fell for a second straight month.
