Home Industry Finance Gold hits record peak as investors anticipate US Fed rate cut Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold by Reuters May 20, 2024 Image credit: Getty Images Gold prices hit an all-time high on Monday as a slowing US inflation trend boosted expectations that the Federal Reserve could deliver its first interest rate cut soon, while silver scaled a more than 11-year peak. Spot gold XAU= was up 0.9 per cent at $2,436.76 per ounce, as of 0340 GMT after hitting a record high of $2440.49 earlier in the session. US gold futures rose 1 per cent at $2,440.60. The main driver for gold is a soft US dollar demand combined with positive sentiment around a potential US Federal Reserve interest rate cut, said Kyle Rodda, a financial market analyst at Capital.com. The dollar index> =USD remained subdued, making greenback-priced bullion more attractive to buyers holding other currencies. Possible US Fed rate cut boosts gold rush Data last week showed signs of cooling inflation and traders now expect a 65 per cent 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 per ounce, a break above could trigger a gain to $2,455. Spot silver XAG= rose 2.5 per cent to $32.28 after hitting an over 11-year high. Platinum XPT= rose 0.7 per cent to $1,088.75, after hitting its highest since May 12, 2023. Palladium XPD= dropped 0.5 per cent to $1,013.56. Read: UAE interest rates remain unchanged amid Fed rate decision
