Gold rises with Fed pause in sight, copper rallies on China stimulus
Investing.com-- Gold prices rose in Asian trade on Friday as markets bet that the Federal Reserve will keep rates on hold despite recent increases in inflation, while copper prices surged on more stimulus measures from major importer China.
Data released this week showed that U.S. consumer and producer inflation rose more than expected through August. But the increases were insufficient in convincing traders that the Federal Reserve will hike rates further when it meets next week.
While gold benefited from this notion, further gains in the yellow metal were held back by a dollar rally, as the greenback scaled six-month peaks on Thursday.
Spot gold rose 0.3% to $1,916.80 an ounce, while gold futures expiring in December rose 0.3% to $1,938.35 an ounce by 00:48 ET (04:48 GMT). Both instruments were still set to close the week marginally lower.
Despite logging some gains in recent sessions, gold prices still remained under pressure from fears of higher U.S. interest rates. Spot gold prices came close to breaking below the $1,900 an ounce level on Thursday, before recovering its losses.
Strength in the dollar and Treasury yields was a key source of this pressure, as markets sought better yields in the greenback and government bonds.
While the Fed is expected to keep rates on hold next week, markets are also uncertain over what the bank’s outlook on rates will look like, considering the recent increases in inflation.
The central bank is widely expected to keep rates higher for longer, with a rate cut being priced in only by mid-2024. Recent increases in inflation also raised the possibility of one more rate hike this year.
Rising interest rates bode poorly for gold, given that they increase the opportunity cost of
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