Gold Prices Near $2,400 as CPI Data Highlights Rate Cut Considerations

Gold prices stabilized in Asian trading on Thursday after experiencing substantial gains overnight, driven by soft inflation data that led the dollar to fall to its lowest level in a month and increased expectations for interest rate cuts.

The price of gold is once again nearing the record highs reached in May as traders ramp up their bets that the Federal Reserve may start cutting rates as soon as September. The dollar’s sharp decline on Wednesday, fueled by this expectation, has benefited the prices of other metals as well.

As of the latest update, gold rose 0.1% to $2,388.84 per ounce, while June contracts steadied at $2,393.50 per ounce.

### Gold Prices Surge on Eased CPI and Growing Rate Cut Speculations

Gold prices saw over a 1% rebound from the previous day following data that indicated a decrease in U.S. inflation in April compared to March, alongside a drop in core inflation as well. These results, combined with softer-than-anticipated economic indicators, have raised hopes for easing inflation in the coming months, which would provide the Fed with more leeway to lower rates.

Market expectations have shifted, with traders now pricing in nearly a 54% chance of a 25 basis point rate cut in September. High interest rates increase the opportunity cost associated with investing in gold and other precious metals, which do not yield direct returns. Conversely, if the U.S. economy continues to slow, gold might see increased demand as a safe-haven asset.

Despite these developments, several Federal Reserve officials have cautioned that the central bank needs more concrete evidence of declining inflation, which still remains above the Fed’s 2% annual target.

Other precious metals also experienced gains, with silver rising 0.5% to $1,081.90 per ounce and platinum increasing by 0.2% to $29.797 per ounce.

### Copper Prices Reach Two-Year Highs Amid Optimism in China

In the realm of industrial metals, copper prices climbed on Thursday and reached heights not seen in over two years, fueled by persistent optimism regarding potential fiscal stimulus measures in China and increased support for the property sector.

On the London Metal Exchange, copper rose 1% to $10,375.00 per ton, while another contract increased by 1.4% to $4.9915 per pound. Both were approaching highs recorded in April 2022.

Chinese authorities announced plans to initiate a significant bond issuance amounting to 1 trillion yuan (approximately $138 billion) this week, while several major cities eased restrictions on home purchases to bolster the property market. Market participants are now keenly waiting for upcoming Chinese economic data for further insights into the world’s largest copper importer.