Gold Prices Rise Following CPI Data; Copper Soars Amid Focus on China Stimulus

Gold prices experienced an increase during Asian trading on Friday, building on the gains achieved overnight. This rise was influenced by strong U.S. inflation data, which was somewhat moderated by a weaker labor market report.

In the realm of industrial metals, copper prices surged significantly as anticipation grew for more signals regarding fiscal stimulus from China. The broader metal market also benefited from a decline in the dollar, which fell from two-month highs. Traders continued to speculate that the Federal Reserve would proceed with interest rate cuts in the months ahead, although at a more gradual pace. Despite the upward movement, gold prices remained below recent highs.

As of the latest reports, spot gold prices climbed 1.4% to $2,645.60 an ounce, while December gold futures saw a similar increase, rising 1.4% to $2,662.50 an ounce.

Despite the rise in gold prices, they are still expected to end the week slightly lower amid market predictions of a smaller interest rate cut by the Federal Reserve in the coming months. The consumer price index inflation data released on Thursday supported this sentiment; however, it was counterbalanced by labor market data indicating a larger-than-anticipated increase in weekly jobless claims. The dollar’s decline from its two-month highs followed this labor market information, as investors considered that a weaker labor market would provide the Fed with further reasons to lower interest rates.

Traders placed an 81% probability on a 25 basis point rate cut in November. While expectations indicate that the Fed will reduce rates more slowly, lower interest rates generally favor gold and other non-yielding assets, as they diminish the opportunity cost of holding those assets.

Additionally, other precious metals saw recovery on Friday, regaining much of their recent losses. Platinum futures increased by 3.2% to $987.85 an ounce, while silver futures rose by 2.9% to $31.56 an ounce.

In copper markets, benchmark futures on the London Metal Exchange rose by 0.9% to $9,772.50 per ton, with December copper futures gaining 1.3% to $4.4562 per pound. This surge in copper came after the metal experienced significant losses earlier in the week amid disappointing indications of stimulus from China, the world’s largest copper importer.

In response to growing demands for targeted economic support, China’s finance ministry is scheduled to hold a press conference on Saturday to outline plans for additional fiscal stimulus. Analysts are projecting that China could unveil at least 2 trillion yuan (approximately $283 billion) in measures, primarily aimed at boosting private consumption.