Gold prices hold above $2,500 on rate cut cheer by Investing.com

Investing.com– Gold prices edged lower in Asian trade on Monday, but remained within sight of record highs last week as the prospect of lower U.S. interest rates hit the dollar and presented a better outlook for metals markets.

The yellow metal hit a record high last week, holding gains in metals markets as traders welcomed dovish comments from the Federal Reserve. Some safe haven claims also supported gold as cease-fire talks between Israel and Hamas yielded few results while hostilities in the Middle East persisted.

was down 0.1% at $2,509.88 an ounce, while December expiry was down 0.1% at $2,545.10 an ounce by 00:57 ET (04:57 GMT) . Spot prices hit a record high of $2,532.05 an ounce last week.

Gold buoyed by rate cut hopes, dollar weak

Gains in the yellow metal came as the dollar fell to a 13-month low amid growing belief that the Fed will begin cutting rates in September.

That notion was furthered by comments from Fed Chairman Jerome Powell on Friday, who said a rate cut was imminent and that further cooling of the labor market was unwelcome.

The prospect of lower rates bodes well for gold and other precious metals, as it lowers the opportunity cost of investing in non-performing assets.

Other precious metals posted some gains last week but pulled back on Monday. was down 0.6% at $965.45 an ounce, while it was down 0.4% at $30.145 an ounce.

Some asylum demand was also in play as hostilities between Israel and Hezbollah escalated over the weekend, while fighting between Russia and Ukraine also continued.

Copper’s recovery cools, but China’s caution persists

Among industrial metals, copper prices fell slightly on Monday as the recovery from recent lows cooled amid lingering concerns about slowing demand in top importer China.

While the prospect of lower rates has inspired some flows into copper, the red metal is still reeling from record highs in July and August.

One month fell 0.1 percent to $4.2557 a pound, having rebounded sharply in the past week on hopes that lower interest rates will help boost global copper demand.