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Picture: 123RF/DARI HAYASHI
Picture: 123RF/DARI HAYASHI

Bengaluru — Gold prices hit a record high on Monday as a slowing US inflation trend boosted the expectation that the Federal Reserve could deliver its first interest rate cut soon, while silver scaled a more than 11-year peak.

Spot gold was up 0.9% at $2,436.76/oz by 3.40am GMT after hitting a record high of $2440.49 earlier in the session. US gold futures rose 1% at $2,440.60.

The main driver for gold is that there is a soft dollar and sentiment is being boosted on the basis that the Federal Reserve is expected to cut rates soon, said Kyle Rodda, a financial market analyst at Capital.com. The dollar index remained subdued, making greenback-priced bullion more attractive to buyers holding other currencies. Data last week showed signs of cooling inflation and traders now expect a 65% chance of a US rate cut by September.

Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.

Minutes of the Fed’s last policy meeting due on Wednesday along with comments from a slew of Fed speakers will be on investors' radar for this week.

“Gold prices sneaked in a cheeky record high ahead of China’s [market] open on Monday. Yet as the move has not been confirmed with by a weaker US dollar, it seems to have been caught a tailwind from higher metals futures on China's exchanges,” said City Index senior analyst Matt Simpson.

China, the top consumer of bullion and a majority of industrial metals, announced “historic” steps on Friday to stabilise its crisis-hit property sector.

According to Reuters technical analyst Wang Tao, spot gold may test resistance at $2,447/oz, a break above could trigger a gain to $2,455.

Spot silver rose 2.5% to $32.28 after hitting a more than 11-year high.

Platinum rose 0.7% to $1,088.75, after hitting its highest since May 12, 2023. Palladium dropped 0.5% to $1,013.56.

Reuters

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