Investing.com-- Gold prices fell slightly in Asian trade on Friday, but were sitting on strong gains from the prior session as softer-than-expected U.S. inflation data ramped up bets on a September interest rate cut.
Gold prices surged past the $2,400 an ounce mark on Thursday and were just under $50 away from a record high, driven by a significant drop in the dollar. The precious metal was also poised for a robust weekly performance.
Gold futures fell 0.3% to $2,408.52 an ounce, while spot gold prices dropped 0.3% to $2,413.75 an ounce by 00:06 ET (04:06 GMT).
Gold heads for weekly gains amid rate cut cheer
Spot prices were on track to gain about 0.7% for the week, with most of the increase coming on Thursday. The U.S. inflation data released on Thursday was slightly below expectations, fueling hopes that the Federal Reserve will start cutting rates soon.
The U.S. dollar and Treasury yields declined on this news, benefiting the metal markets. Traders are now pricing in an over 82% chance of a 25 basis point rate cut in September, up from last week's odds of about 64%.
Lower interest rates reduce the opportunity cost of investing in non-yielding assets like gold, as higher rates make cash or debt yields more attractive.
Other precious metals also retreated on Friday, but were expected to benefit from lower rates. Silver fell 0.4% to $1,015.10 an ounce, while platinum dropped 0.7% to $31.457 an ounce.
Copper dips as China imports shrink
Copper prices fell on Friday as data showed that imports to China, the world's largest copper importer, decreased in June.
Benchmark copper on the London Metal Exchange dropped 0.3% to $9,761.50 a tonne, while one-month copper futures fell 0.7% to $4.4977 a pound.
China's imports of unwrought copper and copper products declined by 3% year-on-year to 436,000 metric tons in June, according to government data released on Friday.
The decrease in imports came as broader Chinese economic indicators unexpectedly shrank in June, raising concerns about weak local demand and a sluggish economic recovery in the country.
China's manufacturing PMI surged to a near two-year high, while industrial profits also exceeded expectations. However, the imposition of higher trade tariffs on key Chinese exports like electric vehicles could counteract this positive trend.
All eyes are now on the upcoming Third Plenum of the Chinese Communist Party for more insights on the economy and potential stimulus measures, with the meeting scheduled for next week.
Analysis:
Gold prices dipped in Asian trade but are set for strong gains for the week due to speculations of a rate cut by the Federal Reserve. Lower interest rates make gold more attractive as an investment, leading to increased demand for the precious metal. On the other hand, copper prices fell as imports to China decreased, signaling weak local demand and economic concerns. Investors should keep an eye on upcoming economic indicators and policy decisions that could impact both gold and copper prices in the near future.