Investing.com — Gold prices fell slightly on Monday but were still trading within sight of record highs as the yellow metal benefited from increased safe-haven demand amid heightened concerns about slowing economic growth.
At 06:00 ET (10:00 GMT), the price was down 0.8% at $2,424.01 per ounce, while the December term was down 0.2% at $2,464.15 per ounce.
A softer dollar also helped metals markets as traders priced in bigger cuts to US interest rates this year amid a slew of weak US economic data.
Gold supported by safe haven demand; record height 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 $30 away from a record high of $2,483.78 an ounce in July.
The yellow metal benefited from safe-haven demand after a series of disappointing US economic data – especially on manufacturing activity and the labor market – raised concerns that the world’s largest economy would slow faster than initially expected.
This led to a massive sell-off in most risk-driven markets, especially in equities, government bonds and foreign currencies, which in turn fueled safe-haven bets for the yellow metal.
The World Gold Council published its quarterly report last week and the industry group reported total demand of 1,258.2 tonnes in the second quarter, the highest on record for a second quarter and about 4% more than the same period in 2023.
The biggest increase in demand came from what the Council called the Over The Counter (OTC) market, which largely means buying from institutional investors, high net worth individuals and family offices.
The Council attributed the surge in interest in OTC to ‘portfolio diversification’, which raises the question of how sustainable this demand is.
The prospect of a weaker economy also had traders pricing in the potential of deeper rate cuts from the Federal Reserve, which recently indicated that a September rate cut was possible.
It is expected that the central bank may cut rates by 50 basis points in September and could end the year with a 100 basis point cut.
Such a scenario bodes well for gold as lower interest rates lower the opportunity cost of investing in non-performing assets.
Other precious metals especially benefited from this idea.
rose 2.6% to $27.655 per ounce, while the price fell 3.7% to $931.85 per ounce.
Copper is slipping despite positive Chinese figures
Among industrial metals, copper prices fell on Monday despite positive economic data from top importer China.
The benchmark on the London Metal Exchange fell 1.1% to $8,960.50 per tonne, while the index fell 1.5% in one month to $4.0420 per pound.
Private purchasing managers’ index data showed on Monday that China’s economy grew more than expected in July, indicating that some facets of the economy remained resilient despite a decline in industrial activity. The reading helped improve sentiment toward China, which was otherwise a major sore point for buyers.
However, growing concerns about an economic slowdown in the country – which could hit copper demand – caused copper prices to fall to near four-month lows in recent sessions. The prospect of a global economic slowdown also bodes ill for the red metal.
(Ambar Warrick contributed to this article.)
