Written by Sherin Elizabeth Varghese
(Reuters) – Gold prices rose to a record high on Monday as a slowdown in U.S. inflation fueled expectations that the Federal Reserve will cut interest rates for the first time this year in June.
Spot gold was up 1.2% at $2,258.53 an ounce at 0815 GMT, after hitting a record high of $2,262.19 in early trading. US gold futures rose 1.8% to $2,279.50.
Commenting on personal consumption expenditure (PCE) prices, Yep Jun Long, market strategist at IG, said: “The lack of an upside surprise in the release of the core PCE price index is a further step for gold prices to enter new record territory.'' It may have become.” Index report.
Jun Long said the core index, currently at its lowest level in nearly two years, could provide some validation for the Fed to begin the rate-cutting process early.
Federal Reserve Chairman Jerome Powell said Friday that the latest U.S. inflation numbers are “in line with what we expect.” According to the data, US prices slowed in February, with the PCE price index increasing by 0.3%.
Traders are currently pricing in a 69% chance that the Fed will start cutting interest rates in June, according to CME Group's FedWatch tool. When interest rates fall, the opportunity cost of holding bullion decreases.
Gold posted its biggest monthly gain in more than three years in March after a strong rally fueled by interest rate cut expectations, strong demand for safe-haven assets and central bank buying.
Ilya Spivak said: “Today's price action is taking place in a very illiquid environment. Most European markets and many Asia-Pacific markets are still closed for Easter Monday. Therefore, we expect participation to pick up later in the week. It would not be surprising if these trends reversed.” , Global Head of Macro at Tastylive.
Spot silver rose 0.7% to $25.15 an ounce, platinum rose 0.2% to $909.76 and palladium rose 0.9% to $1,023.95.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Subransh Sahu)
