Gold prices dip from record highs; rate cuts, recession in focus

Investing.com-- Gold prices fell from record highs in Asian trade on Thursday as a rally in the yellow metal cooled, with market focus remaining on U.S. interest rate cuts and brewing fears of a recession.

The yellow metal surged to record highs this week amid growing conviction that the Federal Reserve will begin cutting rates in September. 

But a mix of profit-taking and a rebound in the dollar pulled gold off its peaks on Thursday.

Spot gold fell 0.5% to $2,500.55 an ounce, while gold futures expiring in December fell 0.4% to $2,547.05 an ounce by 00:15 ET (04:15 GMT). Spot gold hit a peak of $2,532.05 an ounce on Wednesday. 

Rate cut bets persist, but labor market data fuels recession jitters 

Gold’s record highs came as the minutes of the Fed’s late-July meeting showed policymakers were largely in favor of lower interest rates, amid progress in bringing down inflation.

The minutes cemented bets on a September easing, although traders were split over a 25 or 50 basis point reduction, CME Fedwatch showed. 

A sharp downward revision in payrolls data for the year to March 2024, released on Wednesday, spurred renewed fears that a cooling labor market will result in a U.S. recession. 

But while recession fears limited a broader risk-on move in financial markets, gold still fell amid some profit-taking, while the dollar also recovered from recent seven-month lows.

Focus is now on an address by Fed Chair Jerome Powell at the Jackson Hole Symposium on Friday.

Lower rates bode well for gold, given that they reduce the opportunity cost of investing in non-yielding assets. Other precious metals clocked mild gains on this notion, but largely tailed gold.

Platinum futures fell 0.4% to $970.0 an ounce, while silver futures fell 0.3% to $29.448 an ounce. 

Copper dips amid global growth concerns 

Among industrial metals, a recovery rally in copper prices stalled on Thursday amid renewed concerns over slowing U.S. growth. Persistent concerns over a Chinese slowdown also weighed, although copper demand in the country was seen marginally improving this week.

Benchmark copper futures on the London Metal Exchange steadied at $9,262.50 a ton, while one-month copper futures fell 0.2% to $4.1930 a pound.