© Reuters. FILE PHOTO: Ingots of 99.99 percent pure gold are processed at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File photo
By Anjana Anil and Ashitha Shivaprasad
(Reuters) – Gold struck a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June, with safe haven demand from war in the Middle East also tipping the scales in bullion’s favour.
gained 0.6% to $2,127.99 per ounce as of 1409 GMT, having scaled a record $2,141.59 earlier. U.S. firmed 0.5% to $2,135.80.
Bullion last hit a historic peak in December at $2,135.40.
“We wouldn’t be surprised if gold gives back some of these gains as the Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher,” said Nitesh Shah, commodity strategist at WisdomTree.
“Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold.”
The Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday will be closely watched for more clarity on U.S. interest rate path. The next major U.S. economic release will be February’s employment report due on Friday.
Traders currently see a 68% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool.
The non-yielding metal is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making gold costlier for buyers with other currencies.
Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of Israel-Hamas war.
Hamas negotiators will remain in Cairo for another day at the request of mediators, keeping ceasefire talks going after two days with no breakthrough, an official from the militant group said.
Spot platinum fell 1.8% to $881.01 per ounce, and palladium dropped 2.2% to $938.81. Spot silver rose 0.4% to $23.99 per ounce.
