Gold price explodes amid high demand from China. The promise of interest rate cuts in the US is fueling the trend

The price of gold is hitting a new record high, boosted by a possible interest rate cut by the US Federal Reserve and strong demand from China.

The spot price of gold rose to an all-time high of $2,265.73 an ounce on Monday, up 1.6% compared to the value recorded at the close of Thursday’s session, after already setting a series of records in recent sessions, reports Bloomberg .

Statistics released Friday as financial markets were closed showed that core US inflation, the Fed’s favorite gauge of inflationary pressures, fell in February while consumption rose. That brings fresh arguments for a reduction in borrowing costs, even as the US central bank has adopted a cautious tone.

“The data are in line with expectations. The Fed is in no rush to cut interest rates,” Federal Reserve Chairman Jerome Powell said after the publication of inflation figures in February.

However, financial markets estimate there is a 61% chance the Fed will cut interest rates in June, up from a 57% chance on Thursday. Normally, lower interest rates are a positive for gold, which does not bring interest to investors.

“Inflation data, and Powell’s comments in particular, have provided new impetus for gold, and the market is becoming increasingly convinced that the Fed will start cutting interest rates in June,” said Warren Patterson, a financial analyst.

The price of gold is up about 14% since mid-February. The perspective of the monetary policy relaxation of the major central banks, as well as the increased tensions in the Middle East and Ukraine, supported this growth. There have also been significant gold purchases by central banks, particularly in China, where consumers have been hoarding gold amid problems in Asia’s largest economy.