Gold prices stabilized in Asian trading on Wednesday after reaching record highs earlier in the week. The gains were driven by expectations of lower U.S. interest rates, which weakened the dollar and boosted demand for the precious metal.
Other metal prices also saw gains, benefiting from a softer dollar and declining Treasury yields, although their upward momentum slowed amid a broader risk-averse sentiment in the markets.
Spot gold edged up 0.1% to $2,515.44 per ounce, while December gold futures also rose by 0.1% to $2,553.35 per ounce as of 00:51 ET (04:51 GMT). On Tuesday, spot gold prices had reached a record high of $2,531.72 per ounce.
Gold Supported by Rate Cut Expectations; Powell’s Address and Fed Minutes in Focus
The primary driver behind the support for gold and other metal prices has been the persistent expectation that the Federal Reserve will start cutting interest rates in September. According to CME Fedwatch, traders are divided between anticipating a 25 or 50 basis point reduction.
Attention this week is focused on Federal Reserve Chair Jerome Powell’s upcoming address at the Jackson Hole Symposium on Friday, where he is expected to reinforce the Fed’s dovish stance. However, analysts do not expect Powell to explicitly signal any potential rate cuts.
Additionally, the minutes from the Fed’s late-July meeting, due later in the day, are likely to provide further insights, as the central bank had adopted a dovish tone during that meeting.
The prospect of lower interest rates is favorable for gold, as it reduces the opportunity cost of investing in non-yielding assets. This expectation, along with the recent weakness in the dollar, has been a key factor driving gains in the metal markets. However, most of the buying interest has been concentrated in gold, with other precious metals showing only marginal gains.
Platinum futures dipped 0.1% to $956.25 per ounce, while silver futures rose 0.1% to $29.538 per ounce.
Copper Steadies as Markets Weigh Improved Chinese Demand
Among industrial metals, copper prices rose slightly on Wednesday, continuing a rebound from recent lows amid signs of improving demand from China, the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange climbed 0.4% to $9,222.50 per ton, while one-month copper futures increased by 0.2% to $2,554.10 per pound.
Earlier this week, data showed that China’s copper exports declined in July, as domestic buyers took advantage of recent price drops in the metal. This indicated some recovery in Chinese copper demand, following two consecutive months of declining imports.
However, ongoing concerns about China’s economic weakness limited the overall gains in copper, as the country has been struggling with a post-COVID recovery for nearly two years.
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