Source: AFP
Gold hit another new record high on Monday as investors grew confident the Federal Reserve will cut interest rates this year, even as data showed a slight uptick in a key inflation report.
The precious metal has enjoyed healthy buying this year as the US central bank hints at an easing of credit conditions.
On Monday, it hit a new high of $2,256.44, according to Bloomberg News.
On Friday, the personal consumption expenditures (PCE) index — the Fed’s preferred gauge of inflation — showed a small year-on-year increase in March compared with February, although the core value edged down slightly.
Powell said the report was “roughly in line with our expectations” and that policymakers were on track to meet their long-term inflation target of 2%.
He said that while recent inflation data was higher than the Fed would have liked, February’s data was “certainly closer to what we want to see.”
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The data appeared to have little effect on traders’ expectations for a rate cut in June, although Powell warned they were unlikely to fall to levels seen after the 2008 global financial crisis.
Adding to the upward pressure on prices is its demand as a safe haven in times of turmoil due to rising geopolitical tensions, with concerns that Israel’s war on Hamas in Gaza will expand further.
An airstrike in Lebanon on Sunday fueled further tensions, with Israel saying a commander of Hezbollah’s missile unit was “eliminated”.
Israel and the Iran-backed group have been exchanging cross-border fire almost daily for months.
Meanwhile, traders are closely monitoring developments in the long-running conflict in Ukraine.
Because gold does not generate interest, it benefits when central banks lower borrowing costs, as its safe-haven status makes it more attractive to investors.
Source: AFP