Gold prices hit record high as rate cut bets build By Investing.com

Investing.com– Gold prices hit a record high in Asian trade on Friday, buoyed by lingering speculation that the Federal Reserve will cut interest rates next week, while rising safe-haven demand ahead of a tight U.S. presidential election helped, also.

The yellow metal rose on Thursday and Friday, tracking declines in the dollar and Treasury yields as markets maintained bets on a rate cut despite stronger inflation data.

Signs of weakness in the labor market also contributed to this notion.

It rose 0.3 percent to $2,566.59 an ounce, while December expiration rose 0.6 percent to $2,594.70 an ounce by 11:47 p.m. ET (03:47 GMT). Spot gold rose to an early session high of $2,570.06, while gold futures neared a peak of $2,600.

Gold supported by rate cut speculation

Gains in the yellow metal came as investors remained confident the Fed will cut rates at its meeting next week.

But markets were uncertain about the extent of the potential rate cut. The strong inflation readings released earlier this week marked a shift in expectations towards a smaller 25 bps cut.

But particularly weak labor market data released on Thursday brought bets on a 50 bps cut back into play. Traders were seen pricing in a 58% chance of a 25bps discount and a 42% chance of a 50bps discount, according to .

But analysts still expect next week’s meeting to mark the start of an easing cycle for the Fed, with the central bank expected to cut rates by at least 100 bps by the end of the year. After September, there are two more Fed meetings later in the year.

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

Other precious metals rose on the notion, although they lagged behind gold. rose 0.6% to $989.80 an ounce, while rose 0.6% to $30.280 an ounce.

Copper rises on hopes of stimulus from China

Industrial metals were buoyed by the prospect of lower rates as they signaled increased economic activity. Copper prices were also supported by hopes of more stimulus in top importer China.

The London Metal Exchange benchmark rose 0.7 percent to $9,280.0 a tonne, while on the month it rose 0.4 percent to $4.2260 a pound.

A string of weak economic readings from China fueled increased bets that Beijing will implement more stimulus measures to support growth. Citi analysts said they expect “incremental” stimulus measures from China through the rest of the year.