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Summary
Asian trade saw gold prices rise on Friday but with a decline from record highs reached in the prior session, amidst caution before an address by Federal Reserve Chair Jerome Powell. The yellow metal had earlier soared to record highs due to growing conviction that the Fed will initiate interest rate cuts from September.
Gold Prices Rise Amid Rate Cut Speculation
Gold prices rose in Asian trade on Friday but were still nursing a decline from record highs achieved in the prior session. This comes as caution before an address by Federal Reserve Chair Jerome Powell lent some support to the dollar. The yellow metal had earlier reached record highs amid growing conviction that the Fed will initiate interest rate cuts from September.
Spot gold rose 0.4% to $2,495.52 an ounce, while gold futures expiring in December rose 0.6% to $2,530.70 an ounce by 01:24 ET (05:24 GMT). Spot prices had retreated slightly this week after hitting a record high of $2,531.72 an ounce.
The rise in spot gold and futures prices is significant, given the relatively stable performance of the yellow metal despite some profit-taking earlier in the week. Gold still remains well-bid, with investors maintaining their appetite for the precious metal amid growing conviction that the Fed will initiate interest rate cuts from September.
Powell Address and Rate Cut Speculation
Powell's address at the Jackson Hole Symposium later on Friday is expected to offer cues on the Fed's plans to initiate trimming of interest rates. Markets are broadly pricing in a September rate cut, although CME Fedwatch shows traders somewhat split between a 25 or 50 basis point reduction.
Bets on a deeper rate cut were furthered by soft labor data released earlier in the week, which showed a sharp downward revision in payrolls data over the year to March 2024. The reading indicated that recent signs of cooling payrolls growth were from a much weaker position than initially thought, and ramped up concerns over a slowing U.S. economy.
The prospect of slowing growth and lower interest rates bodes well for gold, given its safe haven nature. Lower rates also present a smaller opportunity cost for buying bullion, making it an attractive option for investors seeking to diversify their portfolios.
Other Precious Metals Rise
Other precious metals rose on Friday but were also nursing a middling weekly performance. Platinum futures rose 0.7% to $959.75 an ounce, while silver futures rose 0.9% to $29.290 an ounce.
The rise in platinum and silver prices is significant, given the relatively stable performance of these precious metals despite some profit-taking earlier in the week. Like gold, they still remain well-bid, with investors maintaining their appetite for these metals amid growing conviction that the Fed will initiate interest rate cuts from September.
Copper Prices Rise Amid Rate Cut Speculation
Among industrial metals, copper prices rose on Friday and were set for a second straight week of gains as they saw an extended rebound from lows hit earlier in August. Benchmark copper futures on the London Metal Exchange rose 0.8% to $9,204.50 a ton, while one-month copper futures rose 0.7% to $4.1655 a pound.
Both contracts were up between 0.5% to 1% this week, indicating an extended rebound from lows hit in August. Copper saw a two-week rebound aided by a mix of bargain buying and some improving sentiment towards top importer China.
Markets also bet that lower U.S. interest rates will help improve global copper demand, contributing to the rise in prices. The prospect of slowing growth and lower interest rates bodes well for industrial metals like copper, given their strong correlation with economic growth.
Conclusion
In conclusion, gold prices rose on Friday amidst rate cut speculation, but with a decline from record highs reached in the prior session. Powell's address at the Jackson Hole Symposium later on Friday is expected to offer cues on the Fed's plans to initiate trimming of interest rates. Other precious metals like platinum and silver also rose, while copper prices continued their rebound amid rate cut speculation.
The rise in gold and industrial metal prices is significant, given the relatively stable performance of these markets despite some profit-taking earlier in the week. The prospect of slowing growth and lower interest rates bodes well for these metals, given their safe haven nature and strong correlation with economic growth.