Gold Prices Rise in Asian Trade

Gold prices increased in Asian trading on Friday as the dollar weakened after the Federal Reserve’s significant interest rate cut, with market optimism regarding further reductions.

Copper Prices Surge

Copper prices also surged as reports indicated that China, the top importer, is contemplating supportive measures for its property market after the People’s Bank maintained benchmark lending rates.

Gold initially reacted negatively to the rate cut earlier in the week, following Fed Chair Jerome Powell’s less dovish long-term outlook. However, the market’s optimism for lower rates in the short term weakened the dollar, encouraging investments in risk-driven assets.

Spot gold increased by 0.3% to $2,593.31 an ounce, while December futures rose 0.2% to $2,618.40 an ounce by 00:43 ET (04:43 GMT). Safe haven demand for gold was further supported by escalating tensions in the Middle East.

Weekly Gains for Gold

Spot gold is set for a weekly gain of approximately 0.6% as the Fed begins an easing cycle, potentially reducing interest rates by up to 125 basis points this year. The central bank’s recent 50 bps cut exceeded market expectations, despite Powell indicating that neutral rates will be higher in the future. Analysts predict another 50 bps cut in November.

Concerns about slowing U.S. economic growth have sustained the safe haven appeal of gold. Lower interest rates typically benefit gold as they diminish the opportunity cost of holding the metal. Meanwhile, other precious metals remained stable but lagged compared to gold, with platinum futures steady at $989.55 an ounce and silver futures down 0.3% to $31.340 an ounce.

Copper Up on China Property Stimulus Hopes

Benchmark copper futures on the London Metal Exchange rose by 0.5% to $9,582.50 a ton, and one-month copper futures increased by 0.7% to $4.3788 a pound.

These gains in copper were fueled by reports that China is considering easing major restrictions on home purchases to rejuvenate the housing market, which could benefit the struggling property sector. However, the People’s Bank of China decided to keep its benchmark loan prime rate unchanged, disappointing traders who anticipated further cuts to support the faltering economic growth in the country. Calls for additional stimulus from Beijing have intensified, especially after weak economic readings in August.