Gold prices scaled new highs on the first day of a new week on Monday as traders anticipated more rate cuts by the US Federal Reserve.
Silver prices mimicked the rally in gold and climbed above the $44 per ounce level for the first time since 2011.
The crude oil market was, however, in the red on Monday due to oversupply concerns.
Copper prices on the London Metal Exchange held on to Friday’s gains as the market assessed supply concerns.
Gold hits new high
Gold prices on COMEX were closing in on the $3,800 per ounce mark as the precious metal hit a new record high of $3,762.90 per ounce.
This week, several Federal Reserve officials, including Chair Jerome Powell on Tuesday, are scheduled to speak.
Investors will be paying close attention to their comments for indications regarding the future path of monetary policy.
Market attention is also directed towards Friday’s release of the US core personal consumption expenditure price data, which will offer indications regarding the trajectory of future rate cuts.
The Fed reduced interest rates by 25 basis points on Wednesday, marking its first rate cut since December and indicating a willingness to consider further easing.
According to the CME FedWatch tool, investors are now anticipating two additional 25-basis-point rate cuts this year.
There is a 93% chance of a rate cut in October and an 81% chance of one in December.
This year, gold prices have surged by over 40%, primarily due to widespread geopolitical and economic instability, increased purchases by central banks, and relaxed monetary policies.
Barbara Lambrecht, commodity analyst at Commerzbank AG, said:
However, as we expect more interest rate cuts by the Fed next year than the market does, we anticipate even higher prices on the gold market in the long term.
Elsewhere, the December silver contract on COMEX was up 2.6% at $44.06 per ounce.
Oil falls
On Monday, oil prices fell as worries about Russia and the Middle East were offset by concerns regarding oversupply.
On Saturday, Poland and its allies launched aircraft to secure Polish airspace.
This action followed Russian airstrikes in western Ukraine, close to the Polish border.
Three Russian military jets violated NATO Estonia’s airspace for 12 minutes on Friday, leading to the deployment.
Four Western nations’ recognition of a Palestinian state in the Middle East has provoked a strong reaction from Israel and heightened concerns in the vital oil-producing region.
Brent and the West Texas Intermediate crude settled down more than 1% on Friday to mark a slight decline last week as worries about large supplies and declining demand weighed on sentiment.
The Organization of the Petroleum Exporting Countries and allies are scheduled to once again increase oil production in October, which is likely to put further pressure on prices.
At the time of writing, the price of WTI crude was at $62.03 per barrel, down 0.6%, while Brent was $66.27 a barrel, also down 0.6% from the previous close.
Copper rises slightly
Copper prices on the LME surpassed the $10,000 per ton mark again on Monday, holding onto Friday’s gains.
Traders are attempting to assess the global supply impact following a two-week suspension at Indonesia’s second-largest mine due to an accident.
Recent reports suggest a potentially prolonged suspension, which could swiftly constrict the market and worsen existing supply limitations that have bolstered prices this year.
According to El Mercurio, Codelco, Chile’s state-owned copper mining company, announced that its largest mine, El Teniente, will require more time than initially projected to resume full production.
This follows a fatal tunnel collapse at the mine in July.
Pacheco estimates this year’s copper production from the mine to be just over 300,000 tons, a decrease from last year’s 356,000 tons.
According to El Mercurio, this drop in production is likely to be greater than the 33,000 tons initially predicted by the company.
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