Gold prices rise as the market anticipates rate cuts from the Federal Reserve. This increase brought them close to new record highs. The market's focus shifted to the Federal Reserve's potential rate cuts. The Federal Reserve may start cutting rates from September. This expectation fueled the recent surge in gold prices.
Spot gold rose by 0.2% to $2,427.77 an ounce. Meanwhile, gold futures for August increased by 0.1% to $2,432.30 an ounce. However, gains in gold were capped by a strong dollar. The speculation around Donald Trump's potential second term boosted the greenback. As a result, the dollar's strength limited gold's upward movement.
The yellow metal’s recent advance was largely due to increased bets on Fed rate cuts. Recent soft inflation readings and dovish signals from the Fed supported this sentiment. Fed Chair Jerome Powell’s comments boosted market confidence in lower inflation. Though he did not directly indicate a rate cut, markets interpreted his words as a sign. Consequently, traders are now betting on a September rate cut with nearly 90% certainty.
Other precious metals also saw movement on Tuesday. Platinum futures fell by 0.3%, while silver futures rose by 0.2%. The mixed performance highlighted varying market dynamics for different metals.
The dollar's recovery further stalled gold's advance. The greenback rebounded from a one-month low this week. Increased speculation about Trump's second term bolstered the dollar. A failed assassination attempt on Trump seemingly increased his popularity. This development put him ahead of Joe Biden in the presidential race.
In the industrial metals sector, copper prices remained flat. Concerns over China’s economic outlook clouded the future of copper demand. Benchmark copper futures on the London Metal Exchange fell by 0.1% to $9,795.50 a tonne. One-month copper futures, however, rose by 0.2% to $4.521 a pound. Weaker-than-expected GDP data from China raised doubts about its economic recovery. Additionally, a potential Trump presidency could create more trade issues for China.
Gold prices rise close to record highs amid increased bets on Fed rate cuts. Discover the impact of dollar resilience and Trump speculations.
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