Gold hits fresh all-time peak as U.S. data lifts June rate cut hopes

Gold prices extended their record run on Monday as the latest data showing a slowing U.S. inflation trend boosted 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 up 1% at $2,254.71 per ounce after hitting an all-time high of $2,262.19 earlier in the session. U.S. gold futures climbed 1.7% to $2,275.60.

“The slightly lower than expected US inflation figure last Friday is supporting the outlook of a mid-year rate cut by the Fed,” said UBS analyst Giovanni Staunovo.

Data on Friday showed U.S. prices moderated in February, keeping a June interest rate cut from the Fed on the table. Fed Chair Jerome Powell said February’s inflation data was “more along the lines of what we want to see.”

Growing rate cut expectations, safe-haven demand and central bank purchases amid geopolitical tensions have boosted gold more than 9% this year.

“Markets will now want to see if the payroll data will confirm a soft landing from job market in the U.S.. Ongoing solid demand is helping the yellow metal as well, although higher prices may weigh on jewellery demand,” Staunovo said.

Bullion prices have also hit record highs in other currencies, including euros, the yuan, Indian rupees and the British pound sterling.

Indian gold futures hit an all-time high on Monday, tracking gains in overseas markets, and squeezing demand in the world’s second-biggest consumer of the precious metal, dealers said.

“Today’s price action is happening in a very low liquidity environment – most European and many APAC markets are still closed for Easter Monday. So, it would not be surprising to see these moves reverse when participation rebuilds later in the week,” said Ilya Spivak, head of global macro at Tastylive.