Gold Prices Hit Record Again
The international market has seen gold prices hit a new record as investors are increasingly betting on a new round of easing by the Federal Reserve. The latest data show that London spot gold has broken the $3,680 per ounce mark, setting a new historical high; meanwhile, COMEX gold prices also surged to $3,720 per ounce. This strong rally is driven by a multitude of factors, including expectations of Federal Reserve interest rate cuts, continuous gold purchases by global central banks, and escalating geopolitical tensions.
Against the backdrop of persistently lowering interest rate expectations, gold, as a non-interest-bearing asset, has become even more attractive. With the U.S. Treasury yields falling and the dollar index weakening, gold's role as a safe haven in investment portfolios is again in the spotlight. Some institutions even predict that if even a small portion of U.S. private sector funds shift to gold, the price could be pushed up to $5,000 per ounce.
Copper Prices Surge
Not only gold is performing well, but copper prices on the London Metal Exchange are also breaking through. London copper prices have climbed to $10,190 per ton, the highest since last June, also setting a 15-month record. The rise in copper prices is backed by expectations of sustained demand growth.
Currently, artificial intelligence and the military industry are significant drivers of copper demand. Data center construction, power supply equipment, and cooling systems all require large amounts of copper; at the same time, ammunition, fighter jets, and missile systems in the military manufacturing sector depend heavily on copper supply. Additionally, with the U.S. government designating copper as a defense strategy material, policy support further strengthens the market's optimistic expectations for copper prices.
Rate Cut Expectations as Core Driver
The largest driving force behind the recent rise in commodity prices comes from the expectations of a Federal Reserve interest rate cut. The swap market has generally priced in a 25 basis point cut for the September meeting, with some traders betting on a more significant easing. If rate cuts continue in future meetings, prices for gold, copper, and other commodities are likely to rise further.
Under market scrutiny, this week's Federal Reserve rate decision is a key event. Investors generally believe that if Powell's stance is dovish, the pace of rate cuts could accelerate, igniting a new round of "rate cut trade" trends.
Mergers Reshape Industry Landscape
The rise in copper prices is not only driven by demand expectations but also by accelerated capital movements within the industry. Anglo American and Teck Resources have announced a proposed $53 billion merger plan, which will be the largest mining deal in over a decade. If successfully completed, the merged entity will be among the world's top five copper producers, with major assets in Chile, Peru, and Canada.
This merger is seen as a sign of the industry's long-term optimism for future copper demand. With the continuous push for green energy transformation and infrastructure expansion, copper prices are expected to remain strong in the medium to long term.
Market Outlook
Overall, the simultaneous record highs for gold and copper prices reflect the market's strong expectations for easing policies and the role of commodities as safe havens and value enhancers in the current macroeconomic environment. Analysts point out that this week's Federal Reserve decision and dot plot will be crucial factors influencing the market. Once the easing path is confirmed, gold and copper may continue to be the focus of financial pursuits.
