Gold Prices Rise Amid Rate Cut Speculations

Gold prices edged higher in Asian trading on Wednesday, driven by Federal Reserve Chair Jerome Powell’s comments, which intensified speculation about a possible interest rate cut. However, copper prices fell sharply following mixed inflation data from China, the world’s largest copper importer.

Gold Steadies After Powell’s Remarks

Spot gold rose 0.2% to $2,367.73 an ounce, while gold futures for August delivery increased 0.3% to $2,373.90 an ounce by early morning trading. Gold’s recent gains were supported by a weaker dollar and heightened expectations for a September rate cut. However, the rally stalled as the Federal Reserve did not provide clear signals on the future path of interest rates.

In his testimony, Powell noted some cooling in the labour market and progress in reducing inflation but reaffirmed the Fed’s commitment to its 2% inflation target. Despite maintaining bets on a September rate cut, traders exercised caution ahead of Thursday’s key consumer price index (CPI) inflation data, which is expected to show further cooling in June.

Other precious metals also saw declines. Platinum futures dropped 0.3% to $997.05 an ounce, while silver futures decreased 0.1% to $31.025 an ounce. Despite its recent underperformance, silver has outpaced gold in recent months due to its industrial applications.

Copper Prices Fall on Mixed Chinese Inflation Data

Benchmark copper futures on the London Metal Exchange fell 0.3% to $9,844.50 a tonne, and one-month copper futures declined 0.4% to $4.5652 a pound. Sentiment towards copper was dampened by mixed inflation signals from China. Chinese consumer price index (CPI) inflation fell in June, reflecting weak consumer spending and economic outlook. Although producer price index (PPI) inflation contracted at its slowest pace in 16 months, deflationary trends remain prevalent in China.

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