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Gold extends record run amid inflation concerns


Spot gold was 0.3% higher at $2,286.24 per ounce, and hit a record high of $2,288.09 earlier in the session

Gold prices extended a record run on Wednesday as concerns of rising inflation bolstered demand for gold as a hedge, with bullion traders shrugging off doubts over an imminent U.S. interest rate cut and increasing Treasury yields.

Spot gold was 0.3% higher at $2,286.24 per ounce, as of 0406 GMT, and touched a record high of $2,288.09 earlier in the session. Bullion has reached record highs consecutively since Thursday.

U.S. gold futures added 1.1% to $2,306.60.

Gold continues to receive safe-haven flows as Ukraine continues to attack Russia’s oil infrastructure, to the point it is ignoring increasing U.S. yields and the prospects of the Federal Reserve not cutting rates in June, according to City Index senior analyst Matt Simpson.

Fed policymakers on Tuesday said they think it would be “reasonable” to cut U.S. rates three times this year, even as stronger recent economic data has sown investor doubts about that outcome.

Data this week showed U.S. manufacturing unexpectedly rose, with the increase in raw materials prices triggering concerns that inflation could resurge.

With commodity prices increasing in general, it brings the risks of another round of inflation – so perhaps investors are hedging for inflation, Simpson added.

Gold, which is used as a hedge against inflation and a safe haven during times of political and economic uncertainty, has advanced over 10.8% so far this year and is set for a seventh successive daily increase.

Right now, the market is sensing that inflation is more of a driving variable than the interest rates and part of the momentum is also driven by speculators, hedge funds and commodity funds that start buying gold whenever their quantitative systems give them signals, according to Marex analyst Edward Meir.

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