Gold prices extended their record peak on Monday as the latest data showing a slowing US inflation trend fueled expectations that the Federal Reserve could deliver its first interest rate cut in June.
Lower interest rates reduce the opportunity cost of holding bullion.
Spot gold was 1% higher at $2,254.71 an ounce as of 0926 GMT, after hitting a high of $2,262.19 earlier in the session. U.S. gold futures climbed 1.7% to $2,275.60.
“Friday’s slightly lower-than-expected US inflation figure supports the prospects of a mid-year rate cut by the Fed,” said UBS analyst Giovanni Staunovo.
Data on Friday showed US prices subdued in February, leaving a Fed rate cut in June on the table. Fed Chairman Jerome Powell said February’s inflation numbers were “more in line with what we want to see.”
Growing expectations for rate cuts, demand for safe havens and central bank purchases amid geopolitical tensions have pushed gold up more than 9% this year.
“Markets will now want to see whether payroll data will confirm a soft landing for the US job market. Continued strong demand is also helping the yellow metal, although higher prices could weigh on jewelry demand,” Staunovo said.
Bullion prices have also reached record highs in other currencies, including euros, the yuan, Indian rupees and British pound sterling.
Indian gold futures hit a record high on Monday, tracking gains in overseas markets and depressing demand in the world’s second-biggest consumer of the precious metal, dealers said.
“Today’s price action is taking place in a very low liquidity environment – most European and many APAC markets are still closed for Easter Monday. So it wouldn’t be surprising to see these moves reverse as participation picks up later in the week,” said Ilya Spivak, head of global macro at Tastylive.
Spot silver rose 0.6% to $25.11 an ounce, platinum rose 0.8% to $914.85 and palladium climbed 1.1% to $1,025.85.
Tags: Gold reaches alltime peak data fuels interest rate cut hopes June
