Spot Gold rises to new record as US PCE boosts June cut bets

Spot Gold rose to a fresh all-time high of $2,265.77 per oz. on Monday, after the latest US PCE inflation data reinforced expectations that the Federal Reserve would likely cut interest rates in June.

Data showed last Friday that annual core PCE inflation had eased to 2.8% in February, or the lowest rate in almost three years, from 2.9% in January.

In month-over-month terms, core PCE prices rose 0.3% in February.

Both figures came in line with market consensus.

“The absence of any upside surprises in the core PCE price index release may have provided further go-ahead for gold prices to push into new record territory,” IG market strategist Yeap Jun Rong was quoted as saying by Reuters.

Markets are now pricing in about a 69% chance of a Fed rate cut occurring in June, compared with 64% before the PCE data release, according to the CME FedWatch tool.

Lower interest rates reduce the opportunity cost of holding Gold, which pays no interest.

Meanwhile, Federal Reserve Chair Jerome Powell said that the latest inflation figures were “along the lines of what we would like to see.”

As of 7:11 GMT on Monday Spot Gold was gaining 1.20% to trade at $2,259.95 per troy ounce.

Gold Futures for delivery in June were gaining 1.88% on the day to trade at $2,280.40 per troy ounce.

Elsewhere, Silver Futures for delivery in May were up 1.70% to trade at $25.340 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching down 0.03% to 104.507 on Monday.