Gold Prices Surge to New Highs Amid Rate Cut Expectations

Gold prices surged to new highs on Friday, driven by expectations of interest rate cuts by the Federal Reserve. Spot gold rose 1.5% to $2,493.86 an ounce, while gold futures gained 1.6% to $2,533.10 an ounce, putting both benchmarks on track for weekly gains of over 2%.

The soft inflation data released earlier in the week fueled speculation that the Federal Reserve will cut interest rates in September. While a month-on-month increase in consumer inflation tempered expectations for a larger rate cut, the prospect of lower rates still benefits gold as it reduces the opportunity cost of investing in non-yielding assets.

In addition to rate cut bets, persistent concerns over escalating tensions in the Middle East between Iran and Israel also supported safe-haven demand for gold. Alpine Macro recently advised investors to consider buying gold as geopolitical tensions in the region are expected to intensify in the coming months. The research firm highlighted the potential for limited attacks by Iran on Israel, which could have significant implications for the balance of power in the region.

Meanwhile, copper prices edged lower on Friday, but were set for their first weekly gain in six weeks due to a strike at Chile’s Escondida mine, the world’s largest copper mine. The strike, driven by disputes over compensation, has tightened the outlook for global copper supplies and supported prices. However, concerns over sluggish copper demand, particularly in China, have limited the gains in copper prices.

Overall, the outlook for gold remains positive amid expectations of interest rate cuts and geopolitical tensions, while copper prices are supported by supply disruptions at the Escondida mine. Investors will continue to monitor developments in the Middle East and economic indicators for further insights into the precious metals market.

In conclusion, gold prices surged to new highs on Friday, driven by expectations of interest rate cuts and geopolitical tensions, while copper prices edged lower but were supported by supply disruptions. The precious metals market remains dynamic, with investors closely watching for further developments that could impact prices.