Gold prices have risen close to record highs due to increased safe haven demand. Concerns about slowing economic growth have driven investors to gold. A softer dollar has also supported metal markets. Weak U.S. economic data has led traders to anticipate more U.S. interest rate cuts this year.
Spot gold rose 0.4% to $2,453.51 an ounce, while December gold futures increased by 1% to $2,495.40 an ounce. Gold futures even briefly surpassed $2,500 an ounce recently. However, spot prices were still about $25 below the July record high of $2,483.78 an ounce. Disappointing U.S. economic data, particularly in manufacturing and labor markets, has heightened recession fears. This has fueled safe haven bets on gold.
Traders are now expecting deeper interest rate cuts from the Federal Reserve. The Fed has indicated a possible rate cut in September. The central bank might cut rates by 50 basis points in September and by 100 basis points by year-end. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. This scenario is favorable for gold prices.
Other precious metals have also benefited from these trends. Silver futures jumped 1.2% to $28.72 an ounce. Platinum futures, however, fell 0.8% to $958.40 an ounce.
Among industrial metals, copper prices have seen some support from positive Chinese economic data. London Metal Exchange benchmark copper futures rose 0.6% to $9,151.50 a tonne. One-month copper futures increased by 0.3% to $4.1350 a pound.
Private purchasing managers index data indicated growth in China’s services sector in July. This has improved sentiment towards China, despite ongoing concerns over a manufacturing decline. However, fears of a global economic slowdown continue to weigh on copper demand. Copper prices had recently slumped to near four-month lows.
Gold prices are nearing record highs due to recession fears and anticipated rate cuts. Safe demand and a softer dollar are driving this trend.
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