Gold and Copper prices gain on Fed rate -cut outlook
Gold and Copper prices were higher on Monday morning as the market now anticipates the US Federal Reserve could start cutting interest rates later this year.
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The price of gold
The price of gold has gone up by 0.15% and is currently trading at $2,168. This increase is mainly because there is a possibility that the Federal Reserve might reduce interest rates later in the year. Traders are eagerly waiting for the S&P numbers for the fourth quarter to be released as they hope it will give a fresh push to the market. If the report shows stronger-than-expected data, it could help the US dollar and make gold prices go down. However, the tensions in Ukraine are also contributing to the increase in the price of gold as investors see it as a safe option to invest in. Last week, gold reached a new record of $2,223 before going down a little to $2,207. The decline in the dollar has also played a part in gold prices going up, as it approaches all-time highs.
The price of copper
Moving on to copper, the prices have also gone up today and are at $2,025. Copper has been performing well recently, reaching a high that hasn't been seen since April 10th. There are several reasons for the increase in copper prices. One is that people are concerned about China's efforts to control the capacity after a fall in treatment and refining charges. Another reason is that copper mines are reaching their maximum capacity due to the decreasing quality of the ore and the exhaustion of reserves. Lastly, the end of the Federal Reserve's tightening cycle has positively affected copper prices, as high interest rates and a strong dollar have adversely affected industrial metals in the past few years.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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