By Anjana Anil and Ashitha Shivaprasad
(Reuters) – Gold scaled a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June and on safe-haven demand due to the conflict in the Middle East.
gained 0.8% to $2,132 per ounce as of 02:13 p.m. ET (1913 GMT), having hit a record $2,141.59 earlier.
U.S. settled about 0.7% higher at $2,141.9.
Bullion last hit a record high in December at $2,135.40.
“The big reason here is that we’re seeing the market increasingly believing that a Fed rate cut is nearer rather than further away,” said Bart Melek, head of commodity strategies at TD Securities.
“Markets have to be a little bit more convinced for gold to move higher, but ultimately in the second quarter, we do think it can go to over $2,300 plus.”
Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of the Israel-Hamas war.
“Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold,” Nitesh Shah, commodity strategist at WisdomTree, said.
“We wouldn’t be surprised if gold gives back some of these gains as the U.S. Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher.”
Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday will be closely watched for more clarity on the U.S. interest rate path. The next major U.S. economic release will be February’s employment report due on Friday.
Traders currently see a 70% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool.
Gold is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making the precious metal costlier for overseas buyers.
Spot silver eased 0.8% to $23.70 per ounce, having hit its highest since Dec. 28 earlier in the session.
Other precious metals fell, with platinum slipping 1.8% to $881.23 per ounce, and palladium shedding 1.1% to $949.68.
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