Gold prices rise to near $2,400 with focus on Fed, rate cuts

Investing.com-- Gold prices rose in Asian trade on Monday, recovering more ground from a rout through most of July as focus turned to an upcoming Federal Reserve meeting where the central bank is expected to provide more cues on interest rate cuts.

The yellow metal was also aided by weakness in the dollar, which retreated after key inflation data on Friday pointed to some easing in U.S. inflation- a scenario that gives the Fed more confidence to reduce borrowing rates.

Spot gold rose 0.4% to $2,395.31 an ounce, while gold futures expiring in December rose 0.5% to $2,440.35 an ounce by 00:58 ET (04:58 GMT).

Gold strengthened by rate cut bets 

Gains in the yellow metal were driven chiefly by increased speculation over interest rate cuts, following some encouraging signs from PCE price index data last week, which is the Fed’s preferred inflation gauge.

The reading put this week’s Fed meeting squarely in focus. While the central bank is expected to keep rates unchanged, any signals on its plans to cut rates will be closely watched.

Traders are almost entirely pricing in a 25 basis point cut in September, according to CME Fedwatch.

The prospect of lower rates bodes well for gold, given that it reduces the opportunity cost of investing in the yellow metal. High rates had battered gold prices over the past two years, although increased safe haven demand still helped the yellow metal hit record highs. 

Other precious metals firmed on Monday, also recovering a measure of recent losses. Platinum futures rose 0.8% to $953.35 an ounce while silver futures rose 0.8% to $28.242 an ounce. 

Copper rises after bruising losses, more China cues awaited 

Among industrial metals, copper prices rose on Monday after logging bruising losses over the past month.

Benchmark copper futures on the London Metal Exchange rose 0.2% to $9,130.50 a tonne, while one-month copper futures rose 0.4% to $4.1303 a pound. 

Prices of the red metal were battered by increasing concerns over top importer China, following a series of weak economic signals and lack of regulatory clarity on more stimulus measures. 

Focus this week is on key purchasing managers index data from the country for more cues on business activity.