Gold prices hit a record high, injecting new momentum into the precious metal’s years-long rally, amid expectations of interest rate cuts by the Federal Reserve and growing concerns about the future of central banks.
Spot gold rose as much as 0.9% to $3,508.73 an ounce, surpassing the previous high set in April, but gave back some gains in early Asian trading on Tuesday. So far this year, gold prices have climbed more than 30%, making it one of the best-performing major commodities.
After Federal Reserve Chair Jerome Powell cautiously left the door open to a rate cut, market expectations that the Fed will cut rates this month have intensified, which has further fueled the recent rise in gold prices. An important U.S. jobs report to be released this Friday may further intensify signs of a weakening labor market, thereby supporting a rate cut. This has enhanced the appeal of precious metals, as they do not pay interest.
UBS Group strategist Joni Teves said: “Investors’ increased holdings of gold, especially with the Fed’s rate cut looming, are pushing up the gold price. Our base case is that the gold price will continue to hit new highs in the coming quarters. The low interest rate environment, weak economic data, and the ongoing rise in macroeconomic uncertainty and geopolitical risks have enhanced the role of gold as a portfolio diversification tool.”
Meanwhile, the rally in silver has continued to outpace that of gold. So far this year, the price of silver has risen by more than 40%, and on Monday it broke through $40 per ounce for the first time since 2011. Silver is also valued for its industrial uses in clean energy technologies such as solar panels. Against this backdrop, the market is set to experience a fifth consecutive year of supply shortages, according to the Silver Institute, an industry group. A weaker dollar has also boosted the purchasing power of major consumer countries such as China and India.
In addition, the price of copper also rose last month and has now slightly climbed to the key threshold of $10,000 per ton.
Copper prices last broke through $10,000 in July. Despite the fact that US President Donald Trump did not impose import tariffs on the most widely traded copper prices, some people predicted that copper prices would fall, but copper prices still showed relative resilience. US copper futures prices are still higher than the London copper price, which serves as a global benchmark, and copper prices are still flowing to the United States.
This year, China’s economic activities have been quite vigorous, supporting copper demand. Data from Zijin Mining Group Co. shows that in the first half of the year, China’s apparent consumption of copper, the world’s largest copper market, increased by about 10%. However, there are also warnings that the outlook for the second half of the year will be more moderate.
In a report on August 29, Goldman Sachs Group said, “China’s overall economic activity data seem to be weakening. The growth of apparent consumption of copper and aluminum has slowed down in recent months, which is in line with our expectations.”
Technical analysis:
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Gold: The operation of buying when the blue area was broken through as prompted by our plugin yesterday performed very well. This morning, the price rose to around 3508 at its peak. Today, we should pay attention to the signal of a pullback for confirmation. We should attempt 1-2 times in the 3470/80 area. For detailed positions, please consult the plugin.
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Nasdaq: Yesterday, the US market was closed. Our plugin gave a reminder to stand by. As a result, the overnight price basically maintained a consolidation trend. Today, we will wait for a price breakthrough and a new direction to make short-term trend-following operations. Please note that whether it is an upward or downward breakthrough, we can consider participating. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: After the price broke through yesterday, the low point of the pullback was 0.17 away from our blue zone, and we were unable to enter. Today, we suggest paying attention to the performance of the pullback. We recommend observing the performance after the liquidity sweep near 65. Wait for a new rebound signal to appear before participating once. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
21:45 U.S. August S&P Global Manufacturing PMI Final Reading
22:00 U.S. August ISM Manufacturing Purchasing Managers’ Index
