Gold hits all-time high as US data lifts expectations of Fed interest rate cut in June

Apr 03, 2024

Gold prices reached their all-time high globally on Monday as the latest data showing a slowing inflation trend in the US boosted expectations that the Federal Reserve could deliver its first interest rate cut in June. Indian gold futures also hit a record high on Monday, tracking gains in overseas markets and squeezing demand in the world's second-biggest consumer of the precious metal, according to dealers.

Spot gold was up 0.7 per cent at $2,247.48 per ounce, as of 1059 GMT (4:29 pm IST), after hitting an all-time high of $2,262.19 earlier in the session. US gold futures climbed 1.3 per cent to $2,268.10. "The slightly lower than expected US inflation figure last Friday is supporting the outlook of a mid-year rate cut by the Fed," said UBS analyst Giovanni Staunovo.

Bullion prices hit record highs in other currencies, including the Indian Rupee, euros, the yuan, Japanese Yen and the British pound sterling. Meanwhile, spot silver rose 0.4 per cent to $25.06 per ounce, platinum gained 0.6 per cent to $913.30 and palladium climbed 0.7 per cent to $1,022.30.

Data on Friday showed US prices moderated in February, keeping a June interest rate cut from the Fed on the table. Lower interest rates reduce the opportunity cost of holding bullion. Federal Reserve Chair Jerome Powell said February's inflation data was "more along the lines of what we want to see."

Growing rate cut expectations, safe-haven demand and central bank purchases amid geopolitical tensions have boosted gold by more than 9 per cent this year. "Markets will now want to see if the payroll data will confirm a soft landing from the job market in the US. Ongoing solid demand is helping the yellow metal as well, although higher prices may weigh on jewellery demand," Staunovo said.

"Today's price action is happening in a very low liquidity environment – most European and many APAC markets are still closed for Easter Monday. So, it would not be surprising to see these moves reverse when participation rebuilds later in the week," said Ilya Spivak, head of global macro at Tastylive.