Gold Prices Rise in Asian Trade Ahead of Powell Address: Will Fed Cut Rates?

Gold prices in Asian trade rose on Friday, recovering slightly from a recent tumble from record highs. The increase came as investors exercised caution ahead of an address by Federal Reserve Chair Jerome Powell, which lent some support to the dollar.

Earlier this week, gold prices surged to record highs amid growing expectations that the Fed would begin cutting interest rates starting in September. While prices did retreat slightly due to profit-taking, gold remained relatively well-supported.

Spot gold rose 0.4% to $2,495.52 an ounce, while gold futures expiring in December increased by 0.6% to $2,530.70 an ounce. Despite the slight pullback, spot prices were still down slightly for the week after hitting a record high of $2,531.72 an ounce.

Investors are eagerly awaiting Powell’s speech at the Jackson Hole Symposium later on Friday, where he is expected to provide more insights into the Fed’s plans regarding interest rate cuts. The market is currently pricing in a rate cut in September, with some traders split between a 25 or 50 basis point reduction.

The recent soft labor data released earlier in the week, showing a downward revision in payrolls data, has further fueled expectations of a rate cut. This data, indicating weaker payrolls growth than initially thought, has raised concerns about a slowing U.S. economy.

The prospect of slowing growth and lower interest rates is favorable for gold, given its safe-haven nature. Lower rates also reduce the opportunity cost of holding bullion.

In addition to gold, other precious metals also saw gains on Friday. Platinum futures rose 0.7% to $959.75 an ounce, while silver futures increased by 0.9% to $29.290 an ounce. However, both metals were still nursing middling weekly performances.

Meanwhile, copper prices rose on Friday and were on track for a second consecutive week of gains. The industrial metal has been rebounding from lows hit earlier in August, supported by bargain buying and improving sentiment towards China, the top importer of copper.

Copper prices have also been buoyed by expectations that lower U.S. interest rates will boost global demand for the metal.

Overall, the outlook for gold and copper remains positive, with market dynamics and central bank policies playing a significant role in driving prices. Investors will closely monitor Powell’s speech for further clues on the Fed’s monetary policy direction and its impact on precious and industrial metals.