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Gold price flirts with new highs with market leaning towards June rate cut

Gold prices flirted with record highs on Monday as investors continue to bet on the safe-haven metal in anticipation of a US Federal Reserve interest rate cut this June.

Spot gold rose 1.5% to $2,115.43 per ounce by 2:35 p.m. EDT, just $20 off its record high of $2,135 set in December 2023. US gold futures also traded 1.4% higher at $2,124.70 per ounce.

“We still think it could go higher as well,” said Ryan McKay, senior commodity strategist at TD Securities.

“That’s because some discretionary macro traders are underinvested in the metal “relative to historical norms heading into a Fed cutting cycle,” he told Bloomberg in an interview.

Gold could easily push above the record highs, echoed Phillip Streible, chief market strategist at Blue Line Futures in Chicago, in a Reuters note.

The surge in gold prices comes amid a burgeoning consensus that the first US interest rate cut since early 2020 is just around the corner. Nearly three in five investors bet the Federal Reserve will trim rates in June following a slew of weaker-than-expected US data reports, swaps markets data show.

A polarizing, upcoming US presidential election and ongoing wars in Ukraine and Gaza are also giving bullion longer-term support.

“Heightened geopolitical tensions around the world have reduced the short-selling appetite, basically all strengthening gold’s current buy-on-dips credentials,” wrote Ole Hansen, Saxo Bank’s head of commodity strategy.

Robust buying by investors has been reflected in gold exchange-traded funds, with holdings of SPDR Gold Shares

seeing their first daily inflow in nine trading sessions last Friday, Bloomberg data showed.

Earlier, London’s gold price benchmark hit an all-time high of $2,098.05 an ounce at an afternoon auction, surpassing the previous record of $2,078.40 set on Dec. 28.