Investing.com– Gold prices rose in Asian trade on Monday and were trading in sight of record highs as the yellow metal benefited from increased safe haven demand amid heightened concerns over slowing economic growth.
A softer dollar also aided metal markets, as a swathe of weak U.S. economic readings saw traders pricing in greater reductions in U.S. interest rates this year.
rose 0.4% to $2,453.51 an ounce, while expiring in December rose 1% to $2,495.40 an ounce by 00:51 ET (04:51 GMT).
Gold buoyed by safe haven demand; record high in sight
Gold futures briefly hit record highs above $2,500 an ounce in recent sessions. But spot prices- which indicate near-term demand for gold- were trading about $25 away from a record high of $2,483.78 an ounce hit in July.
The yellow metal benefited from safe haven demand after a raft of disappointing U.S. economic readings- especially on manufacturing activity and the labor market- pushed up concerns that the world’s biggest economy was slowing faster than initially expected.
This sparked a massive selldown across most risk-driven markets, especially in equities, Treasuries and foreign exchange, in turn fueling safe haven bets for the yellow metal.
The prospect of a weaker economy also saw traders pricing in the potential for deeper interest rate cuts by the Federal Reserve, which recently signaled that a September rate cut was possible.
The central bank is expected to potentially cut rates by 50 basis points in September and could end the year with rates down by 100 basis points, showed.
Such a scenario bodes well for gold, given that lower interest rates reduce the opportunity cost of investing in non-yielding assets.
Other precious metals mostly benefited from this notion. jumped 1.2% to $28.720 an ounce, while fell 0.8% to $958.40 an ounce.
Copper stays off lows on some positive Chinese data
Among industrial metals, copper prices were helped off recent lows by some positive economic data from top importer China.
Benchmark on the London Metal Exchange rose 0.6% to $9,151.50 a tonne, while one-month rose 0.3% to $4.1350 a pound.
Private purchasing managers index data on Monday showed China’s grew more than expected in July, indicating that some facets of the economy remained resilient despite a decline in manufacturing activity. The reading helped improve sentiment towards China, which has otherwise been a major pain point for copper.
Growing concerns over an economic slowdown in the country- which could dent copper demand- saw copper prices slump to near four-month lows in recent sessions. The prospect of a global economic slowdown also bodes poorly for the red metal.
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