The price of the precious metal settled at an all-time high on Monday, supported by continuing geopolitical tensions and bets on a Fed rate cut.
Gold futures expiring in April increased by 1.4 percent to $2,125.65 an ounce, while spot gold increased by 0.5 percent to settle at a record of $2,126.30.
Some weak U.S. data drove gold’s gains. s. economic data generating speculation about a June interest rate reduction from the Fed.
However, as traders awaited more indications from the central bank, they once more retreated from placing large bets on the yellow metal.
Gold takes a hit when U.S. Interest rates meant to control inflation increase returns on rival assets like bonds and strengthen the US dollar, which makes purchasing gold with foreign money more expensive.
In essence, increased geopolitical tensions around the world have strengthened gold’s buy-on-dips appeal. On Monday afternoon, the benchmark for gold prices reached an all-time high of $2,098.05 per troy ounce, surpassing the previous record of $2,078.40 per ounce set on December 17.
Price actions revealed that the yellow metal’s price finished yesterday strongly positive, having settled above the $2,100 per ounce barrier. This strengthened the outlook for the continuation of the bullish trend on an intraday and short-term basis. This serves as a reminder that holding above $2066 per ounce is crucial to maintaining the anticipated rise.
Gold traders are now focusing on Fed Chair Jerome Powell’s two-day testimony this week in hopes of gaining additional insight into the direction of interest rates.
The Fed Chief is expected to stick to his position that the Fed needs more evidence to believe that inflation is returning to the bank’s 2 percent annual target, according to analysts. Powell is also expected to continue to lean hawkishly. The CME Fed watch tool indicates that traders were still pricing in a higher likelihood of a 25-basis point cut in June.
The Fed will likely take the cooling labor market into account when it decides to change interest rates. In terms of industrial metals, May-expiring copper futures dropped 0.4% to $3.8443 per pound as investors became wary of the red metal in advance of significant announcements from China, the country’s top importer.
