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Gold rallies to record high on rate cut bets


Spot gold advanced 0.8% to $2,145.09 per ounce after reaching an all-time high of $2,152.09 earlier in the session

Gold rallied to a record on Wednesday, building on stellar momentum driven mostly by speculations for U.S. monetary easing, while autocatalyst palladium popped back above the $1,000 level for the first time since January 12.

Spot gold advanced 0.8% to $2,145.09 per ounce as of 1903 GMT after reaching an all-time high of $2,152.09 earlier in the session.

U.S. gold futures settled 0.8% higher at $2,158.2.

Silver gained 1.9% to $24.15.

Gold got an additional boost as the dollar dropped after Federal Reserve Chairman Jerome Powell indicated a rate reduction later this year.

Gold is likely to push higher as bullish sentiment remains dominant. Nonetheless, bullion may take a little time to digest Powell’s overall comments as well as see Friday’s employment report, said Tai Wong, a New York-based independent metals trader.

Gold drops when high U.S. interest rates raise returns on competing assets like bonds and boost the dollar, making the bullion costlier for overseas buyers.

There is definitely been macro data that has pushed us in this direction and the follow on to policy expectations from the Fed. But the response in the gold market has been multiples of what long-term fair value models suggest, said Michael Hsueh, FX & Commodities Strategy analyst at Deutsche Bank.

Traders now see a 70% probability for a June Fed rate reduction.

CTAs are now firing long on all cylinders in gold, with funds holding around 80% of their historic max long position, Ryan McKay, senior commodity strategist at TD Securities wrote.

London’s gold price benchmark reached an all-time high of $2,142.85 per troy ounce at an afternoon auction, the London Bullion Market Association said.

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