Gold prices rise, eye record highs amid bets on smaller rate cut by Investing.com

Investing.com– Gold prices rose in Asian trade on Thursday and remained within sight of record highs, as traders bet the yellow metal will continue to benefit from a lower interest rate environment.

But bets on a higher interest rate cut by the Federal Reserve eased sharply after core consumer price index inflation data read more than expected for August. Traders were seen positioning for a smaller cut of 25 basis points later in September – a notion that boosted the dollar and limited gold’s advance.

It was up 0.2 percent at $2,516.88 an ounce, while December expiry was up 0.1 percent at $2,544.55 an ounce by 00:36 ET (0436 GMT).

Gold sits below record highs, with Fed, PPI inflation on tap

Spot gold traded just below a record high of $2,532.05 an ounce, after coming within striking distance of the level earlier this week.

The yellow metal has benefited from increased safe-haven demand over the past week, especially as fears of a US recession have weighed on risk-on markets.

On Wednesday, traders largely scaled back expectations of a 50 bps rate cut at the Fed meeting next week, with the central bank now expected to adopt a 25 bps cut, it showed.

Sticky inflation gives the Fed less impetus to cut interest rates sharply.

Ahead of next week’s meeting, markets will also have to deal with inflation data due later on Thursday.

However, the prospect of lower rates still presents a positive scenario for gold and precious metals as it lowers the opportunity cost of investing in non-performing assets.

rose 0.4% to $961.85 an ounce, while rose 0.4% to $29.047 an ounce.

Copper is higher on some hopes of Chinese stimulus

Among industrial metals, copper prices rose on Thursday, recovering some recent losses, as a series of weak Chinese economic readings boosted expectations of more stimulus for the world’s biggest copper importer.

The London Metal Exchange benchmark rose 0.4% to $9,180.0 a tonne, while on the month it rose 0.3% to $4.180 a pound.

A series of weak economic readings from China weighed on copper prices in the past week as traders feared a slowdown in the country would dampen its appetite for copper. China’s copper imports also fell for a third consecutive month.

But this raised hopes of more stimulus measures in the country. Analysts at Citi wrote in a recent note that the government is likely to adopt more interest rate cuts and mortgage refinancing measures to support slowing local growth and demand.