Investing.com — Gold prices rose in Asian markets on Thursday, remaining near record highs as traders bet the metal will still benefit from a low interest rate environment.
But expectations of a big rate cut from the Federal Reserve have plummeted after August core CPI inflation data came in better than expected. Traders were likely expecting a smaller 25 basis point cut later in September, which boosted the dollar and limited gold's gains.
As of 00:36 ET (04:36 GMT), it was up 0.2% to $2,516.88 an ounce, while December maturities were up 0.1% to $2,544.55 an ounce.
Gold Prices Stuck Below All-Time Highs Amid Fed and PPI Inflation
Spot gold was trading just below its all-time high of $2,532.05 an ounce earlier this week.
Gold has benefited from increased safe-haven demand over the past week, especially as fears of a U.S. recession battered risk-driven markets.
Traders on Wednesday significantly scaled back their expectations of a 50 basis points cut at next week's Fed meeting, indicating they now expect the Fed to deliver a 25 basis points cut.
If inflation remains high, the Fed will have less incentive to cut interest rates significantly.
Ahead of next week's meeting, markets will also have to grapple with inflation data due to be released later on Thursday.
Nevertheless, the prospect of lower interest rates still represents a favorable scenario for gold and precious metals, given that it reduces the opportunity cost of investing in non-yielding assets.
It rose 0.4% to $961.85 an ounce and added 0.4% to $29.047 an ounce.
Copper rises slightly on hopes of Chinese stimulus
Among industrial metals, copper prices rose on Thursday, recouping recent losses as a string of weak economic data from China, the world's largest copper importer, spurred hopes of further stimulus measures in the country.
The London Metal Exchange benchmark rose 0.4% to $9,180.0 a tonne, while one-month contracts rose 0.3% to $4.180 a pound.
Copper prices fell last week after a series of weak economic data from China left traders worried that a slowdown in the country would dampen demand for the metal. Chinese copper imports also fell for the third straight month.
But it has raised hopes of further stimulus at home, with Citi analysts saying in a recent report that the government is likely to implement further interest rate cuts and mortgage refinancing measures to shore up slowing growth and domestic demand.
