Gold hits record highs as rate cut bets burnish appeal

by Jonathan Adams

Spot gold was up 0.4% at $2,156.93 an ounce, hitting a record high of $2,164.09 and US gold futures rose 0.2% to end at $2,165.2

Gold prices rose to an all-time high on Thursday and continued to extend their record this week, as expectations for U.S. monetary easing rose and bullion continued to be supported by central bank buying and safe-haven demand.

As of 1900 GMT, spot gold was up 0.4% at $2,156.93 an ounce, hitting a record high of $2,164.09 during Asian trading hours. US gold futures rose 0.2% to end at $2,165.2.

Powell said the Fed is “not far” from getting enough confidence that inflation is heading to the Fed’s 2% goal to be able to start interest-rate cuts.

Traders are now pricing in a 74% chance of a June rate cut, up from about 63% on February 29, according to CME’s FedWatch tool.

A low interest rate environment lowers the opportunity cost of holding non-yielding gold and weighs, making bullion cheaper for foreign buyers.

Rate cut bets are driving gold prices and everyone is expecting they will come, said World Gold Council market strategist Joseph Cavatoni.

Central banks’ gold purchases also continue to be very strong, Cavatoni added.

Friday’s U.S. nonfarm payrolls report could provide further market direction.

In the spot market, consumption was expected to slow during India’s wedding season due to price increases, but China, a major buyer, could see solid safe-haven demand.

Geopolitical risks are also the major driver for bullion, said James Steel, precious metals analyst at HSBC.

We only have a narrow group of assets that investors can really call safe haven, and gold is number one amongst them, he said.

Since the start of the Gulf conflict, gold bars have risen to more than $300.

However, gold’s recent rise has been accompanied by a rise in riskier assets.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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