Gold’s Uptick Fueled by Economic Data and Interest Rate Expectations
Gold prices climbed for the third consecutive session on Monday, driven by positive economic data that increased expectations of interest rate cuts by the U.S. Federal Reserve.
Spot gold rose 0.3% to $1,372.27 per ounce, reaching its highest level since July 24 and gaining over 2% on Friday. U.S. gold futures also improved, rising 0.8% to $1,426.60 per ounce.
“The likelihood of a rate cut in September is higher, and even more so for another rate cut in December. This is quite bullish for gold,” said Daniel Pavilonis, a strategist at RJO Futures.
Economic Data Supports Interest Rate Cut Expectations
The Department of Labor reported that nonfarm payrolls increased by 73,000 in July, following a downward revision of June’s increase to 14,000. These figures reinforced expectations of a U.S. Federal Reserve interest rate cut in September, raising the probability to 86%, according to the FedWatch tool by CME.
Gold typically performs well in low-interest-rate environments and is considered a hedge against inflation.
Trump Tariffs Likely to Persist
Trade Representative Jamieson Greer stated that tariffs imposed by U.S. President Donald Trump on numerous countries are likely to remain rather than decrease as part of ongoing negotiations. Trump set tariffs including 35% on many Canadian goods, 50% for Brazil, 25% for India, 20% for Taiwan, and 39% for Switzerland.
Other Precious Metals Performance
- Silver for immediate delivery gained 0.7% to $19.29 per ounce.
- Platinum added 1.2% to $1,330.30 per ounce.
- Palladium lost 2.1% to $1,182.61 per ounce after hitting a three-week low earlier in the session.
Copper Gains Following Mine Accident in Chile
Copper prices rose due to fears of a supply shortfall after an accident at a mine in Chile, the world’s largest copper producer. However, gains were limited by concerns over the global economy.
Three-month copper on the London Metal Exchange rose 0.6% to $9,692 per metric tonne following modest gains on Friday.
The London Metal Exchange copper has rebounded 20% since April, when it hit its lowest level in over 16 months. However, it has retreated from the high of over $10,000 reached in early July.
U.S. copper futures on the Comex exchange rose 0.1% to $4.44 per pound.
Chilean Mine Accident Affects Operations
The significant accident at Codelco’s El Teniente mine in Chile, which resulted in six worker fatalities due to an earthquake and collapse, led to the suspension of operations in the affected area. Chile’s Minister of Mines stated on Sunday that authorities would determine when it was safe to resume operations.
El Teniente, which produced 356,000 tonnes of copper last year, is a complex of over 4,500 kilometers of underground tunnels and galleries in the Andes mountain range.
