Gold prices rise following the release of CPI data, while copper experiences a surge amid anticipation of stimulus measures from China
Gold prices advanced in Asian trade on Friday, building on overnight gains as strong U.S. inflation data was tempered by a soft labor market report.
Meanwhile, copper prices surged sharply, driven by expectations of further fiscal stimulus announcements from China.
A weaker dollar also supported broader metal markets, as it retreated from two-month highs. Traders continue to anticipate that the Federal Reserve will cut interest rates in the coming months, though at a slower pace. Despite the rally, gold remained well below its recent peaks.
Spot gold rose 1.4% to $2,645.6 an ounce, while December gold futures increased by 1.4% to $2,662.50 an ounce
Gold set for muted weekly performance amid expectations of smaller rate cuts
Despite the gains, gold was still on track to close the week slightly lower as markets speculated that the Fed would reduce rates by a smaller margin in the near future.
Thursday’s consumer price index (CPI) data reinforced this outlook, although it was offset by labor market figures, which showed a bigger-than-expected rise in weekly jobless claims.
The U.S. dollar dropped from two-month highs following the jobless claims report, as labor market weakness is likely to give the Fed more reason to lower interest rates.
CME’s FedWatch tool indicated that traders were pricing in an 81% chance of a 25 basis point rate cut in November.
While the Fed is expected to adopt a more gradual pace of cuts, any reduction in rates generally supports gold and other non-yielding assets by lowering their opportunity cost.
Other precious metals also rose on Friday, recovering a significant portion of their recent losses. Platinum futures gained 3.2% to $987.85 an ounce, while silver futures climbed 2.9% to $31.558 an ounce.
Copper gains as Chinese fiscal stimulus looms
Benchmark copper futures on the London Metal Exchange advanced 0.9% to $9,772.50 per ton, while December copper futures rose 1.3% to $4.4562 per pound.
The copper rally followed sharp losses earlier in the week, driven by underwhelming signals on stimulus from China, the world’s largest copper importer.
China’s finance ministry is set to hold a press conference on Saturday, where it is expected to unveil plans for additional fiscal stimulus in response to mounting calls for targeted economic support.
Analysts predict that Beijing could announce at least 2 trillion yuan ($283 billion) in measures, with a focus on boosting private consumption.
