Mumbai, 20 May (Commoditiescontrol): Gold prices surged to a record high on Monday, driven by growing expectations of Federal Reserve interest rate cuts following recent U.S. economic data.
Spot gold rose 0.6% to $2,430.19 per ounce, after reaching an all-time high of $2,440.49 earlier in the session. U.S. gold futures also climbed 0.7% to $2,434.50.
Last week's economic data bolstered predictions that the Federal Reserve might reduce interest rates twice this year. Despite this, Fed policymakers have not officially indicated a timeline for potential rate cuts. Fed Governor Michelle Bowman reiterated her belief that inflation will decline with steady policy rates, but noted a lack of improvement in inflation this year and expressed readiness to raise rates if inflation progress stalls or reverses.
Gold is traditionally seen as a hedge against inflation, though higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
In China, the government announced significant measures to stabilize its struggling property sector, including facilitating 1 trillion yuan ($138 billion) in additional funding and easing mortgage rules. Local governments are also set to purchase some apartments to aid the sector.
Despite the rise in gold prices, physical purchases in key consumer markets were deterred. In China, dealers offered lower premiums, and in India, discounts deepened due to tepid gold-buying activity during a lull in the wedding season.
The positive global outlook for Asian markets remains, as investors anticipate U.S. interest rate cuts, keeping the dollar, bond yields, and market volatility in check while boosting risk assets.
In other precious metals, spot silver increased by 1.1% to $31.85 per ounce. Platinum edged up 0.5% to $1,085.95, and palladium gained 0.1% to reach $1,009.50 per ounce.
(By Commoditiescontrol Bureau: 09820130172)
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