Gold prices continued to break records on Monday, following data showing that US inflation moderated in February.
This development fuels bets that the Federal Reserve (the U.S. central bank) will cut interest rates in June. Jerome Powell, Chairman of the Federal Reserve, stated on Friday that the latest U.S. inflation data “aligns with what we want to see.”
“I think it’s a really exciting moment in gold,” said Joseph Cavatoni, market strategist at the World Gold Council, told CNBC on Monday. “What’s really driving it is, I think, many market speculators really getting that confidence and comfort [in] the Fed cuts,” he said.
Market traders now anticipate, with a 69% probability, that the Fed will reduce interest rates in June, according to the CME Group’s FedWatch tool.
Lower interest rates decrease the opportunity cost of holding gold, thereby enhancing its attractiveness.
As of 4:07 GMT, spot gold prices rose by 1.33% to $2,262.43 per ounce, reaching a record high of $2,265.73 per ounce earlier in the session.
U.S. gold futures also saw an increase of 1.98% to $2,282.55 per ounce, with a session high of $2,286.35 per ounce.
The dollar index fell by 0.1% against a basket of competitor currencies, making gold more appealing to holders of other currencies.
In terms of other precious metals, spot silver prices increased by 1% to $25.22 per ounce. Platinum rose by 0.6% to $913.85 per ounce, and palladium saw a 0.3% increase to $1,018.22 per ounce.
