Gold prices rise, record highs close as CPI data fuels rate cut bets

Gold prices rose in Asian trade on Thursday, remaining close to record highs as softer-than-expected U.S. consumer inflation data spurred bets that the Federal Reserve will begin trimming rates.

Gains in the yellow metal were also held back by improved risk appetite, while a monthly increase in consumer price index inflation saw traders position for a smaller rate cut in September. 

Spot gold rose 0.2% to $2,452.56 an ounce, while gold futures rose 0.4% to $2,490.40 an ounce by 01:05 ET (05:05 GMT).  Gold close to record high, Sept rate cut in focus

Spot gold prices came close to a record high of over $2,480 this week, as safe haven demand was also buoyed by worsening geopolitical tensions in the Middle East. 

But gold had initially marked a negative reaction to the CPI data on Wednesday, as a month-on-month increase in inflation saw traders favor a smaller, 25 basis point cut by the Fed in September, CME Fedwatch showed. The tool had earlier indicated traders were split over a 25 bps and a 50 bps cut, with the latter presenting a more favorable outlook for metal markets. 

Still, the prospect of lower interest rates bodes well for gold, given that lower rates decrease the opportunity cost of investing in the yellow metal. This kept the yellow metal in sight of recent peaks, with losses in the dollar and Treasury yields also sparking 

Other precious metals also rose on Thursday. Platinum futures rose 0.5% to $935.65 an ounce, while silver futures rose 1.6% to $27.773 an ounce. Copper rises amid mixed Chinese data 

Among industrial metals, copper prices rose on Thursday amid some positive economic readings from top importer China, although the red metal was still nursing steep losses in recent sessions. 

Benchmark copper futures on the London Metal Exchange rose 0.5% to $8,991.50 a ton, while one-month copper futures rose 0.5% to $4.065 a pound. 

Data from China showed some improvement in consumer spending, with retail sales growing more than expected in July.

But industrial production - which is a key driver of China’s copper demand- grew less than expected, as did fixed asset investment . China’s unemployment rate also unexpectedly increased. 

Concerns over slowing Chinese demand saw copper nursing steep losses over the past month, especially as recent data also showed China’s copper imports fell for two straight months.

Source: Investing.com