BENGALURU: Gold prices hit a three-month peak on Monday, driven by increased bets for a June interest rate cut by the US Federal Reserve.
Spot gold was up 0.8% at $2,099.79 per ounce as of 10:20 a.m. ET (1520) GMT, its highest since Dec. 4, when prices hit an all-time high of $2,135.40.
US gold futures fell 0.2% to $2,091.50. Gold surged by about $50 over the course of last week, driven by tepid US manufacturing and construction spending, and a reduction in price pressures. Gold could easily push above the record highs, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.
“(Fed Chair Jerome) Powell speaks two times this week and he could come out and be a bit more dovish... we could see a miss on the (US) jobs data on Friday,” all factors that will help gold, Streible added. Markets are currently pricing in a 71% chance of a Fed rate cut in June, according to the CME Fed Watch Tool.
“If inflation numbers remain tame, gold’s going to continue to trend higher,” said Jim Wyckoff, senior analyst at Kitco Metals. Traditionally considered a safe way to preserve wealth, the non-yielding metal suffers when high interest rates to tame rising price pressures raise returns on competing assets such as bonds and boost the dollar, making gold costlier for buyers with other currencies.
“Heightened geopolitical tensions around the world have reduced the short-selling appetite, basically all strengthening gold’s current buy-on-dips credentials,” wrote Ole Hansen, Saxo Bank’s head of commodity strategy.
London’s gold price benchmark hit an all-time high of $2,083.15 at a morning auction, the London Bullion Market Association said. Platinum rose 0.8% to $894.10 per ounce and palladium eased 0.6% to $949.50. Spot silver gained 1.4% to $23.47.
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