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Gold prices hit record highs on U.S. rate cut bets


Spot gold added 1.2% to $2,220.85 per ounce, logging its best month since July 2020, at a 9% increase, and a second consecutive quarterly rise

Gold prices reached a record high on Thursday, and logged their best month in more than three years, driven by U.S. interest rate cut expectations and strong safe-haven demand.

Spot gold added 1.2% to $2,220.85 per ounce as of 1750 GMT, logging its best month since July 2020, at a 9% increase, and a second consecutive quarterly rise. Bullion reached a record high of $2,225.09 per ounce earlier in the session.

U.S. gold futures settled 1.2% higher at $2,238.4.

Traders are “position squaring ahead of the holidays and increasing trading activity into the month-end and quarter-end,” according to Daniel Ghali, commodity strategist at TD Securities, which has boosted gold prices.

Gold could rise further if the markets start to expect a deeper Fed cutting cycle, and has the potential to “hold on to these highs, but we do see signs of buying exhaustion emerging in the very near term,” he said.

The prices are also rising due to “the fact that there are still major geopolitical tensions globally,” which could push investors to turn to gold as a neutral reserve asset, according to Everett Millman, chief market analyst with Gainesville Coins.

While there are some hints that inflation is running hotter than policymakers would like, that does not necessarily explain the high valuations for gold right now, Millman said.

The U.S. core PCE price index report is due on Friday, which could help investors gauge the Federal Reserve’s policy stance.

Traders are currently pricing in a 64% probability of a June rate cut, shows the CME’s FedWatch tool.

The new & higher Gold floor is $2,000/oz which is symbolic of this new macro regime – Central Banks are tolerating ‘higher for longer’ inflation, MKS PAMP stated in a note.

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