Gold strikes record high as traders bet on interest rate cuts
Gold has struck a record high amid speculation of the Federal Reserve cutting interest rates later this year
GETTY
Gold has struck a record high today, rallying further above $2,100 per ounce as traders bet on a US interest rate cut in June.
Spot gold gained 0.6 per cent to $2,127.99 per ounce as of 14:09 GMT.
Bullion hit a record $2,141.59 earlier in the day. US gold futures firmed 0.5 per cent to $2,135.80.
Gold last hit a historic peak in December 2023, reaching $2,135.40.
The Fed Chair Jerome Powell will testify on Capitol Hill on Wednesday and Thursday
GETTY
Nitesh Shah, commodity strategist at WisdomTree, said: "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.
"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."
Bullion is pressured when high interest rates, intended to try ease inflation, raise returns on competing assets, such as bonds, and boost the dollar, making gold more expensive for buyers with other currencies.
Traders are currently seeing a 68 per cent chance that the Federal Reserve will begin cutting interest rates by June, according to the CME FedWatch tool.
The Fed Chair Jerome Powell will deliver a congressional testimony on Wednesday and Thursday, which will be closely watched for a better idea of the US interest rate path.
On Friday, the US will publish February’s employment report.
Gold, often used as a safe haven of value during times of political and financial uncertainty, has increased by more than $300 dollars since the start of the Israel-Hamas war.
Benchmark 10-year US Treasury yields fell to a one-month low on Tuesday after data showed US services industry growth slowed slightly and as investors prepared for US jobs data on Friday.
LATEST DEVELOPMENTS:
US services industry growth slowed slightly in February amid a decline in employment.
A gauge of prices paid for inputs by businesses also dropped to 58.6 from an 11-month high of 64.0 the month before.
Ellis Phifer, managing director of fixed income research at Raymond James in Memphis, Tennessee, said the services number is "the area the Fed is more focused on".
He added that inflation and employment components are "some of the biggest factors".