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Gold rises amid rate cut expectations


Spot gold added 0.5% to $2,174.51 per ounce, while silver gained 0.2% to $24.71

Gold prices rose on Monday, driven by expectations of interest rate cuts by the U.S. Federal Reserve this year, even as traders await inflation readings this week for confirmation on the timing of these cuts.

Spot gold added 0.5% to $2,174.51 per ounce as of 1745 GMT, while silver gained 0.2% to $24.71.

U.S. gold futures settled 0.8% higher at $2,176.4.

The weekly initial jobless claims print is due on Thursday and will be followed by the U.S. core PCE price index data on Friday. Market reaction to the PCE data may only be seen next week because of the Good Friday holiday.

Gold can easily reach the $2,300 levels or higher in the second quarter, as discretionary traders and exchange-traded fund (ETF) investors, who so far have not really participated in the rally, come into the market once rate cuts are confirmed, according to Bart Melek, head of commodity strategies at TD Securities.

But stronger economic data can prompt a decline in gold, Melek said.

The dollar also pared some of last week’s gains, making bullion cheaper for overseas buyers.

Gold reached record highs last week after the Federal Reserve reiterated its view of three rate cuts this year.

Traders are pricing in a 70% chance of a rate cut in June, vs. 65% before the Federal Reserve’s March policy meet last week.

Lower interest rates tend to make zero-yield gold more appealing.

Gold also continued to draw support from strong central bank buying and safe-haven demand, according to analysts.

Among autocatalysts, platinum added 1.1% to $903.59 and palladium jumped 2.3% to $1,008.08.

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