Gold prices steadied at a 10-day high in Asian trade on Thursday after growing bets on interest rate cuts by the Federal Reserve pulled down the dollar and Treasury yields.

But gold’s advance was stalled by hawkish signals from the minutes of the Fed’s June meeting, while anticipation of key nonfarm payrolls data kept traders cautious.

Spot gold rose 0.1% to $2,359.56 an ounce, while gold futures expiring in August fell 0.1% to $2,367.15 an ounce by 00:27 ET (04:27 GMT). 

Gold benefits from rate cut bets, but caution persists 

The yellow metal marked strong gains on Wednesday, tracking a sharp fall in the dollar as traders upped their bets for a rate cut in September. 

The trend came following weaker-than-expected ADP employment data and a soft reading on non-manufacturing activity, which pushed up bets that the U.S. economy was cooling.

The CME Fedwatch tool showed traders pricing in an over 68% chance for a 25 basis point cut in September, up from a 59% chance seen a day ago.

Lower rates bode well for non-yielding assets such as gold, given that they diminish the appeal of Treasuries and the dollar. 

But optimism over rate cuts was still constrained by hawkish signals from the minutes of the Fed’s June meeting, which showed policymakers were still not confident over bringing down lending costs.

Caution ahead of key nonfarm payrolls data, which has consistently topped expectations in recent months, also kept sentiment limited. Improved risk appetite also saw traders prefer assets such as stocks and currencies. 

Other precious metals were mixed. Platinum futures rose 0.7% to $1,019.40 an ounce, while silver futures fell 0.5% to $30.70 an ounce. But silver had vastly outperformed gold over the past 12 months. 

Copper prices muted amid mixed economic cues 

Among industrial metals, copper prices were subdued after marking some gains on a softer dollar. But gains in copper were limited by signs of cooling U.S. economic activity, while weak signals from China also tied into copper weakness this week.

Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,849.0 a tonne, while one-month copper futures fell 0.1% to $4.5255 a pound. 

 

Both contracts were nursing steep losses through June as sentiment over top importer China soured, while global economic growth also appeared to be cooling, which bodes poorly for copper demand.