Investing.com — Gold prices hit a record high in Asian markets on Tuesday, extending their recent upward trend amid continued optimism over U.S. interest rate cuts, with attention focused this week on further signs of things to come.
Among industrial metals, copper prices surged after the Chinese government announced a series of stimulus measures, raising hopes of an economic recovery in the world's largest copper importer.
Gold prices soared to record highs after the Federal Reserve cut interest rates dramatically last week, and the prospect of further rate cuts suggests the metal will rise further.
Mixed purchasing managers' indexes from several major economies also boosted gold demand. Continuing tensions in the Middle East also boosted gold demand.
It rose 0.3% to $2,638.31 an ounce, while December maturities rose 0.3% to a high of $2,660.80 an ounce.
Gold rises as focus shifts to further Fed moves
Gold remains on optimism with a series of further data due to be released from the Fed in the coming days and the prospect of lower interest rates.
Several Fed officials said Monday they supported last week's 50 basis point cut but expected the pace of cuts to slow in coming months, though Citi analysts expect at least 125 basis points of cuts by the end of the year.
More Fed officials are scheduled to speak this week, but the most closely watched will be on Thursday.
Attention this week will also be on data on Friday on one of the Fed's most important inflation measures, which is expected to show that inflation in August remained above the central bank's target range.
Falling interest rates bode well for gold as they reduce the opportunity cost of investing in non-yielding assets. After the Fed's decision, dollar and Treasury yields fell, allowing gold to rise further.
Other precious metals rose on Tuesday but mostly lagged gold in recent trade. Gold rose 1.1% to $971.20 an ounce, while U.S. gold futures rose 1.1% to $31.430 an ounce.
Copper prices rise on positive sentiment over China's stimulus package
The London Metal Exchange's benchmark price rose 1.6 percent to $9,702.50 a tonne, while one-month contracts rose 2.1 percent to $4.4380 a pound.
China announced a series of stimulus measures on Tuesday, most notably a 50 basis point cut in bank reserve requirements and a cut in existing mortgage interest rates.
The measures have raised hopes that economic growth in the world's largest copper importer will improve, boosting demand for the metal.
However, global Purchasing Managers' Indicators (PMIs) pointed to a slowdown in manufacturing activity, limiting copper's gains.
