Gold Price Update

Gold prices retreated slightly on Monday but remained close to record highs due to increased safe haven demand amidst concerns over slowing economic growth.

At 06:00 ET (10:00 GMT), spot gold had dropped 0.8% to $2,424.01 an ounce, while gold futures expiring in December fell 0.2% to $2,464.15 an ounce.

A softer dollar supported metal markets, as a series of weak U.S. economic readings led traders to anticipate further reductions in U.S. interest rates this year.

Gold Buoyed by Safe Haven Demand; Record High in Sight

Gold futures briefly hit record highs above $2,500 an ounce in recent sessions. However, spot prices, which indicate near-term demand for gold, were trading about $30 away from a record high of $2,483.78 an ounce reached in July.

The yellow metal benefited from safe haven demand following disappointing U.S. economic readings, particularly concerning manufacturing activity and the labor market, raising concerns that the world’s largest economy was slowing down more rapidly than expected.

This triggered a massive sell-off across risk-driven markets, notably in equities, Treasuries, and foreign exchange, further fueling safe haven investments in gold.

The World Gold Council’s quarterly report revealed total demand of 1,258.2 metric tons in the second quarter, the highest on record for this period and up 4% compared to 2023.

The biggest demand increase came from the Over The Counter (OTC) market, indicating purchases by institutional investors, high net-worth individuals, and family offices. The Council attributed the surge in OTC demand to “portfolio diversification,” raising questions about its sustainability.

The anticipated economic slowdown also led traders to consider the possibilities of deeper interest rate cuts by the Federal Reserve. A September rate cut was suggested by the central bank, with expectations of rates potentially being reduced by 50 basis points, and possibly down by 100 basis points by the year’s end, as per CME Fedwatch.

Such prospects favor gold, as lower interest rates minimize the opportunity cost of investing in non-yielding assets.

Other precious metals generally saw benefits from this situation. Silver futures jumped 2.6% to $27.655 an ounce, whereas platinum futures declined 3.7% to $931.85 an ounce.

Copper Slips Despite Positive Chinese Data

In the industrial metals sector, copper prices fell on Monday, despite encouraging economic data from top importer China.

Benchmark copper futures on the London Metal Exchange decreased by 1.1% to $8,960.50 a tonne, while one-month copper futures dropped 1.5% to $4.0420 a pound.

Data showed China’s services sector grew more than expected in July, indicating resilience in parts of the economy despite manufacturing decline. This improved sentiment towards China, a key factor for copper prices.

However, growing concerns regarding an economic slowdown in China—which could reduce copper demand—have caused copper prices to fall to near four-month lows recently. Concerns about a global economic slowdown may also adversely affect copper demand.

*(Ambar Warrick contributed to this article.)