Investing.com– Gold prices steadied in Asian trade on Thursday after clocking strong overnight gains as some soft inflation data pulled the dollar to one-month lows and pushed up expectations of interest rate cuts. 

The yellow metal was now back in sight of record highs hit in May, as traders increased bets that the Federal Reserve will begin cutting rates by as soon as September. The dollar fell sharply on Wednesday on this notion, which in turn benefited broader metal prices. 

rose 0.1% to $2,388.84 an ounce, while expiring in June steadied at $2,393.50 an ounce by 23:43 ET (03:43 GMT). 

Gold surges as CPI eases, rate cut bets increase 

Gold prices were sitting on an over 1% bounce from Wednesday after data showed U.S. inflation eased in April from March, while also fell from the prior month.

The readings, which were followed by softer-than-expected data, pushed up hopes that inflation will ease in the coming months, giving the Fed more confidence to begin trimming rates.

The showed traders pricing in a greater chance of a 25 basis point cut in September, at nearly 54%. 

High rates push up the opportunity cost of investing in gold and other precious metals, given that they offer no direct yield. The yellow metal may also benefit from increased safe haven demand if the U.S. economy cools further this year. 

Still, a slew of Fed officials warned over the past week that the central bank needed more confidence that inflation was going down. Inflation also remained comfortably above the Fed’s 2% annual target. 

Other precious metals also advanced. rose 0.5% to $1,081.90 an ounce, while rose 0.2% to $29.797 an ounce. 

Copper prices sit at 2-year high on China hopes 

Among industrial metals, copper prices pushed higher on Thursday and remained at over two-year peaks amid persistent optimism over more fiscal stimulus in China, as well as increased support for the property market.

on the London Metal Exchange rose 1% to $10,375.0 a ton, while rose 1.4% to $4.9915 a pound. Both contracts were close to highs seen in April 2022. 

Beijing said it will begin a massive, 1 trillion yuan ($138 billion) bond issuance this week, while several major cities also relaxed restrictions on home buying to support the property market. 

Chinese and data, due Friday, is now awaited for more cues on the world’s biggest copper importer.

Investing.com– Oil prices rose in Asian trade on Thursday, extending gains from the prior session as a softer-than-expected U.S. consumer inflation reading brought down the dollar and ramped up hopes of interest rate cuts. 

A bigger-than-expected draw in U.S. inventories also fueled bets on tighter global supplies in the coming months, while markets waited to see whether an accident in Galveston, Texas, had any bearing on oil supplies. 

expiring in July rose 0.5% to $83.17 a barrel, while rose 0.5% to $78.57 a barrel by 20:32 ET (00:32 GMT). 

Both contracts were trading higher for the week, as optimism over more fiscal stimulus in China also drove up prices. Beijing said it will begin a massive, 1 trillion yuan ($138 billion) bond issuance as soon as this week. 

Any potential supply disruptions from dire wildfires in Canada, which neared the country’s major oil sands regions, also factored into stronger prices. 

Soft US CPI data dents dollar, boosts oil 

Oil markets were swept up in the broader cheer over soft readings on U.S. inflation, which dented the dollar and saw traders increase bets on a September interest rate cut.

The prospect of lower rates tied into hopes that global economic activity will not cool as sharply as expected in 2024, which in turn bodes well for oil demand.

A softer also factored into stronger oil prices, given that the commodity is priced in the greenback. A weaker dollar also encourages international demand by making oil cheaper to buy. 

US inventories shrink more than expected 

Official data on Wednesday showed that U.S. oil shrank a bigger-than-expected 2.5 million barrels in the week to May 10, with and stockpiles also seeing unexpected draws.

The data pushed up hopes that demand was improving in the world’s biggest fuel consumer, especially as the travel-heavy summer season approaches.

Shrinking inventories could also signal tighter U.S. markets, although this notion was offset by production remaining near record highs. 

An accident in Galveston, Texas, which resulted in an oil spill, was also in focus for any potential supply disruptions.

But while the prospect of tighter supplies boosted markets, the International Energy Agency forecast that demand was likely to weaken in 2024.

The IEA cut its demand outlook for 2024 by 140,000 barrels per day to 1.1 million bpd. 

This contrasted heavily with a forecast from the Organization of Petroleum Exporting Countries that oil demand will amount to 2.25 million bpd in 2024- a forecast the OPEC maintained in a monthly report on Tuesday.

By Emily Chow

SINGAPORE (Reuters) -Oil prices extended gains from the previous session on Thursday on signs of stronger demand in the U.S., where data showed slower inflation than markets expected, bolstering the argument for an interest rate cut that could drive greater consumption.

futures rose 32 cents, or 0.4%, to $83.07 a barrel at 0620 GMT, while U.S. West Texas Intermediate crude (WTI) gained 31 cents, or 0.4%, to $78.94.

“A more tamed read for U.S. April inflation and a far weaker-than-expected read in U.S. retail sales seem to offer room for the Fed to consider earlier rate cuts, with market expectations leaning more firmly for policy easing to kickstart in September this year,” said IG market strategist Yeap Jun Rong.

“The larger-than-expected drawdown in inventories for last week also offered some calm, while geopolitical tensions continue to rock on in the Middle East.”

U.S. consumer prices rose less than expected in April in a boost to financial market expectations for a September rate cut by the Federal Reserve, which could temper dollar strength and make oil more affordable for holders of other currencies.

Elsewhere, U.S. crude oil, gasoline and distillate inventories fell, reflecting a rise in both refining activity and fuel demand, showed data from the Energy Information Administration (EIA).

Crude inventories fell 2.5 million barrels to 457 million barrels in the week ended May 10, the EIA said, versus the 543,000 barrel consensus analyst forecast in a Reuters poll.

Signs of slowing inflation and stronger demand were supporting prices, ANZ Research also said in a client note, as is geopolitical risk, which it noted remains elevated.

In the Middle East, Israeli troops battled Hamas militants across Gaza, including Rafah, which had been a civilian refuge.

Ceasefire talks mediated by Qatar and Egypt are at a stalemate, with Hamas demanding an end to attacks and Israel refusing until the group is annihilated.

Gains were constrained after the IEA trimmed its forecast for 2024 oil demand growth, widening the gap between its view and that of producer group OPEC.

Global oil demand this year will grow by 1.1 million barrels per day (bpd), the IEA said, down 140,000 bpd from its previous forecast, largely due to weak demand in developed nations of the Organisation for Economic Co-operation and Development.