Gold soared to a historic high on Monday, driven by anticipation of an interest rate cut by the United States Federal Reserve (Fed) in June.
The gold reference price surged 1.2% to $2,258.53 per ounce, reaching a peak of $2,262.19 earlier in the day.
According to IG Yeap experts, Jun Rong, the release of the Personal Consumption Expenditure (PCE) Price Index without positive surprises could fuel further increases in gold prices.
Jun Rong told Reuters that the current nearly two-year lows in the PCE index provide the Fed with the opportunity to implement interest rate cuts sooner.
Despite Fed Chairman Jerome Powell’s repeated statements indicating no urgency to cut interest rates, market projections have swiftly adjusted, with a nearly 70% probability of rate cuts starting in June, totaling 75 basis points for the year, as noted by Sérgio Ávila, an IG specialist cited by Efe.
US PCE inflation accelerated to 2.5% annually in February from 2.4% in January but slowed to 0.3% monthly from 0.4% in January.
Investors currently assign a 69% probability to the Fed, led by Jerome Powell, announcing the first interest rate cut in June, according to CME Group’s FedWatch.
Notably, lower interest rates are typically favorable for gold prices.
