The price of gold reached a new record amid expectations that the Fed will cut interest rates

The price of gold continued to rise to a new record high on Monday, boosted by signals that the US Federal Reserve is getting closer to cutting interest rates, as well as geopolitical tensions and robust demand for the yellow metal from China, reports Bloomberg, quoted by Agerpres.

The spot price of gold rose to a historic 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.

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.

More positive statistical data led to an increase of approximately 14% in the gold price starting from 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.

After the release of inflation numbers in February, Federal Reserve Chairman Jerome Powell said the data was “in line with expectations,” adding that the Fed was in no rush to cut interest rates.

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, analyst at ING Groep NW

The positive prospects of gold were supported by a number of important banks. Among them, JPMorgan Chase & Co. estimated last month that the price of an ounce of gold could reach $2,500 this year. Also, analysts from Goldman Sachs Group believe that there is the potential for gold to reach $2,300 an ounce, in the context of low interest rates.