Gold Reaches All-Time High Due to Expectations of Fed Rate Cut and Increased Safe Haven Demand

Gold prices hit a record high on Monday, driven by a combination of factors including expectations of monetary policy easing by the Federal Reserve and escalating geopolitical tensions in the Middle East.

The price of gold surged by 1.1% to reach $2,440.59 an ounce in early Asian trading, surpassing the previous intraday record set in April. Traders are increasingly betting on the Fed to lower borrowing costs as early as September, which would benefit gold as it does not pay interest.

Last week, the US dollar weakened and Treasury bonds rallied after data showed that inflation in April was lower than expected. This provided support for gold, which is priced in dollars.

The precious metal’s safe-haven status was highlighted after a helicopter carrying Iranian President Ebrahim Raisi crashed in dense fog on Sunday. This incident, along with a Houthi missile attack on a China-bound oil tanker in the Red Sea, added to concerns about rising geopolitical risks in the region.

Hedge funds trading Comex futures have increased their bullish bets on gold to a three-week high, according to the latest data from the Commodity Futures Trading Commission.

In addition to gold, silver, palladium, and platinum prices also rose. Silver, in particular, was trading near an 11-year high, driven by strong demand in the physical metals market and tightening supply dynamics.

Overall, the outlook for precious metals remains positive as investors seek safe-haven assets amid uncertainty in the global economy and geopolitical landscape.