Gold prices rose to a record high on Monday as a weaker US inflation report strengthened bets that the Federal Reserve would deliver its first interest rate cut of the year in June.
Spot gold rose 1.2% to $2,258.71 an ounce as of 0328 GMT, after hitting a high of $2,259.49 earlier in the session. U.S. gold futures rose 1.8% to $2,279.10.
“The lack of upside surprises in the release of the core PCE price index may have been the trigger for gold prices to push into new record territory,” said IG market strategist Yeap Jun Rong, referring to the personal consumption index report. expenditure (PCE).
The core reading, now at its lowest level in almost two years, may provide some validation for the Fed to start its rate-cutting process sooner rather than later, Jun Rong said.
U.S. prices moderated in February, with the PCE price index up 0.3%, data showed on Friday.
The latest U.S. inflation data “is in line with what we would like to see,” Fed Chairman Jerome Powell said, signaling that a June rate cut is on the table.
Traders currently estimate a 69% probability that the Fed will start cutting rates in June, up from 64% before the data came in on Friday, according to CME Group’s FedWatch Tool.
Lower interest rates reduce the opportunity cost of holding bullion.
Gold posted its biggest monthly gain in more than three years in March after a blistering rally fueled by bets on interest rate cuts, strong safe-haven demand and central bank purchases.
“Positioning among money managers has recently reached a two-year high, but is still not at extended levels seen in 2016 or 2020, which may suggest room for further catch-up buying,” Jun Rong said.
Spot silver rose 0.7% to $25.15 an ounce, platinum rose 0.6% to $913.65 and palladium climbed 0.8% to $1,022.70.
Tags: Gold reaches record high weak data confirming bets interest rate cuts June
