Gold hits new record high on Fed rate cut bets
LONDON
Gold hit another fresh record high yesterday as investors grow confident that the Federal Reserve will cut interest rates this year, even after data showed a slight uptick in a key inflation report.
The precious metal has enjoyed healthy buying interest this year as the U.S. central bank hints at an easing of credit conditions.
Yesterday, it hit a new high of $2,256.44, according to Bloomberg News.
On March 29 the closely watched personal consumption expenditures (PCE) index, the Fed's preferred gauge of inflation, showed a small on-year rise in March compared with February, though the core reading eased slightly.
Jerome Powell said that while the recent inflation data was higher than the Fed would have liked, the February figures were "definitely more along the lines of what we want to see."
The data appeared to have little impact on traders' expectations for a June interest rate cut, though Powell warned they were unlikely to fall to the levels seen after the 2008 global financial crisis.
Adding to the upward pressure on prices is its demand as a safe haven in times of turmoil owing to growing geopolitical tensions, with concerns that Israel's war on Hamas in Gaza will spread further.
An air strike in Lebanon Sunday stoked further tensions, with Israel saying a Hezbollah missile unit commander had been "eliminated".
Meanwhile, traders are also keeping a close eye on developments in the long-running Ukraine conflict.
Because bullion does not generate any interest, it benefits when central banks lower borrowing costs as its safe-haven status makes it more attractive to investors.
