Gold prices rise to record highs amid rate cut bets by Investing.com

Investing.com– Gold prices rose slightly in Asian trade on Wednesday, eyeing recent records, as traders waited to see how much the Federal Reserve will cut interest rates.

Bullion prices briefly touched record highs this week amid growing expectations of a 50 basis point cut that hurt the dollar and Treasury yields. But some stronger-than-expected U.S. data complicated expectations of a big rate cut.

It was up 0.2 percent at $2,574.15 an ounce, while it was up 0.3 percent at $2,600.40 an ounce by 00:16 ET (04:16 GMT).

Gold just below record highs, with rate cuts in focus

Spot prices were just below the record high of $2,589.78 an ounce hit earlier this week.

The biggest support for gold was the growing belief that the Fed will do so at the conclusion of a meeting later on Wednesday.

While markets were initially divided on a cut of 25 or 50 basis points, it showed that expectations have shifted towards a cut of 50 bps in recent sessions.

Bets on a 50 bps cut persisted even as recent inflation data also came in stronger than expected, reflecting some resilience in the US economy.

But concerns about a weakening labor market are expected to prompt the Fed to begin an easing cycle that could see interest rates cut by at least 100 bps by the end of 2024.

Lower rates bode well for gold and other precious metals, as they herald a lower opportunity cost of investing in non-yielding assets.

But other precious metals lagged behind gold, which fell 0.5 percent to $983.90 an ounce, while it fell 0.5 percent to $30.837 an ounce.

Copper slips as Chinese markets reopen

Among industrial metals, copper prices fell on Wednesday as markets in top importer China reopened after a long weekend, with local traders reacting to weaker economic data from the country.

The London Metal Exchange benchmark fell 0.6 percent to $9,326.50 a tonne, while on the month it fell 0.9 percent to $4.2475 a pound.

Weak Chinese industrial production and retail sales data released over the weekend pointed to sustained weakness in the country’s biggest economic engines, which traders feared could further dampen appetite for copper.

But the weak readings also spurred some bets that Beijing will be forced to implement more stimulus measures, which could boost near-term growth and help boost copper demand.

This notion helped limit total copper losses.