Gold prices hit record high on rate cut; copper rises on China stimulus By Investing.com

Investing.com– Gold prices hit record highs in Asian trade on Tuesday, extending a recent streak of gains amid lingering optimism about U.S. interest rate cuts, focusing on several benchmarks ahead this week.

Among industrial metals, copper prices rose sharply after the Chinese government announced a wave of stimulus measures, raising hopes of an economic recovery in the world’s biggest copper importer.

Gold soared to record highs after a blistering interest rate cut by the Federal Reserve last week, with the prospect of further cuts presenting more upside for the yellow metal.

Mixed purchasing managers’ index readings from several major economies also boosted demand for gold, as did continued tensions in the Middle East.

It rose 0.3% to $2,638.31 an ounce, while December expiry rose 0.3% to a peak of $2,660.80 an ounce.

Gold rises on focus on several Fed indices

The yellow metal remained bullish on the prospect of lower rates, with a string of more indications from the Fed in the coming days.

Several Fed officials said on Monday they supported the bank’s 50 basis point cut last week, but expected to slow the pace of cuts in the coming months. But analysts at Citi said they expect at least 125 bps of cuts by the end of the year.

Several Fed officials will speak this week, particularly on Thursday.

This week also focuses on data – the Fed’s preferred gauge of inflation – due on Friday. The reading is expected to show inflation remains above the Fed’s target range in August.

Lower rates bode well for gold as they lower the opportunity cost of investing in non-yielding assets. Dollar and Treasury yields fell after the Fed’s decision, allowing for more gains in gold.

Other precious metals rose on Tuesday but have largely lagged behind gold in recent sessions. rose 1.1% to $971.20 an ounce, while rose 1.1% to $31.430 an ounce.

Copper prices rise on stimulus from China

The London Metal Exchange benchmark rose 1.6 percent to $9,702.50 a tonne, while on the month it rose 2.1 percent to $4.4380 a pound.

China announced a wave of stimulus measures on Tuesday, the most notable being a 50bp cut in bank reserve requirements and a cut in rates on existing mortgages.

The measures boosted hopes that economic growth in the world’s biggest copper importer would improve, in turn boosting copper appetite.

But a slew of mixed purchasing managers’ index readings around the world capped copper’s gains as they showed a decline in manufacturing activity.