Gold prices rose in Asian trading on Tuesday, nearing new high levels amid increasing bets that the Federal Reserve will start cutting interest rates from September. However, gold’s gains were limited due to some resilience in the dollar, as increasing speculations of Donald Trump winning a second term boosted the dollar.
Spot prices are now less than $30 away from the all-time high of around $2,450 recorded in late May. The recent advance of the yellow metal was mainly driven by weak inflation readings.
Federal Reserve Chairman Jerome Powell said on Monday that the bank had gained increased confidence that inflation is declining. Although he did not directly hint at cutting interest rates, markets interpreted his comments as indicating that a cut is imminent. Prices of other precious metals rose on the back of this idea but showed mixed performance on Tuesday. Platinum futures fell by 0.3%, while silver futures rose by 0.2%.
The dollar’s recovery halted gold’s advance, especially as the American currency recovered from its lowest level in more than a month this week. The dollar received major support from increasing speculations of Trump winning a second term. Trump is expected to enact more protectionist trade policies, which could lead to higher inflation and support the dollar.
Among industrial metals, copper prices remained stable as the outlook for the red metal was unclear due to growing concerns about China. Benchmark copper futures on the London Metal Exchange fell by 0.1%, while one-month copper futures rose by 0.2%.
Weaker-than-expected GDP data in China raised doubts about the country’s economic recovery, which could be a bad omen for copper demand. Furthermore, a Trump presidency could impose more trade headwinds on China, negatively affecting its economy.
