Gold prices surge on rate cut hopes, copper rebounds

Investing.com-- Gold prices rose in Asian trade on Thursday, extending gains this week as weak economic data fueled expectations of interest rate cuts by the Federal Reserve, denting the dollar. 

The yellow metal was sitting on strong gains this week as traders steadily priced in bets that the Fed will begin cutting rates in September. A rate cut by the Bank of Canada and anticipation of a widely expected cut by the European Central Bank also boosted optimism over loosening monetary conditions across the globe.

This saw the yellow metal advance even as broader risk appetite improved. 

Spot gold rose 0.6% to $2,370.40 an ounce, while gold futures expiring in August fell 0.6% to $2,389.70 an ounce by 01:07 ET (05:07 GMT).

Gold less than $100 from new record, rate cuts in focus 

Spot gold was now trading less than $100 below a record high hit in May. But the factors behind its advance this time were different.

Bullion prices had surged to record highs in May in the immediate aftermath of a helicopter crash in Iran, which killed President Ebrahim Raisi, and pushed up concerns over worsening geopolitical conditions in the country.

But gold fell swiftly from these levels after conditions did not worsen as expected. 

This time, however, gold’s advance was fueled by expectations of lower interest rates, particularly in the U.S., which present better conditions for investing in the yellow metal.

Markets were seen increasing their bets on a September rate cut by the Fed after a swathe of weak U.S. economic readings this week. 

Nonfarm payrolls data is due on Friday and is also expected to factor into expectations for rate cuts. The Fed is set to meet next week and is set to keep rates steady.

Other precious metals also advanced. Platinum futures rose 0.6% to $1,008.55 an ounce, while silver futures rose 1.6% to $30.552 an ounce. 

Copper prices rebound from 1-mth low, but sentiment remains fragile

Among industrial metals, copper prices rebounded from a one-month low on Thursday, taking some support from a softer dollar. 

Benchmark copper futures on the London Metal Exchange rose 1.5% to $10,074.50 a tonne, while one-month copper futures rose 0.5% to $4.6490 a pound. 

But sentiment towards the red metal remained weak, especially as optimism over an economic recovery in top importer China waned in recent weeks. 

Key trade data from China is due on Friday and is likely to offer more cues.