Finance
Gold hits record highs on hopes of Fed rate cuts and rising demand for ports
(Bloomberg) — Gold rose to a record high, boosted by growing optimism that the Federal Reserve will ease monetary policy this year, along with rising geopolitical tensions in the Middle East.
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Bullion rose as much as 1.1% to reach $2,440.59 an ounce in early Asian hours, surpassing a previous intraday record set in April. Traders have increased their expectations in recent sessions that the Federal Reserve could cut borrowing costs as early as September, a scenario that would support gold because it pays no interest.
Last week, the US dollar fell and government bonds rose after data released on Wednesday showed inflation eased more than expected in April. That provided support for the precious metal, which is priced in the dollar.
The metal’s sanctuary status was in the spotlight on Monday after a helicopter carrying Iranian President Ebrahim Raisi crashed in dense fog on Sunday. The news added to the sense of growing geopolitical risks across the region after an oil tanker bound for China was struck by a Houthi missile in the Red Sea on Saturday.
“Gold’s rally is based on news and uncertainty about what happened in Iran,” said Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney. “There is certainly an element of jumping to conclusions based on very little information,” he said, adding “investors are likely reluctant to blur positions given lower liquidity levels in Asia.”
Hedge fund trading Comex futures lifted bullish bets on gold to a three-week high in the week ending May 14, according to the latest data from the Commodity Futures Trading Commission.
Spot gold rose 0.8% to $2,434.19 an ounce at 10:13 a.m. in Singapore. The Bloomberg Dollar Spot Index was flat, after falling 0.7% last week to the weakest in more than a month. Silver, palladium and platinum all rose.
Read more: Silver is more popular than gold as its purchasing power increases
Silver was trading near an 11-year high after a strong rally on Friday was helped by spillover sentiment in broader physical metals markets, where tighter supply has boosted investor demand for materials like copper. Unlike gold, the white metal is also considered an industrial commodity, given its use in things like solar panels.
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