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Gold rallied toward a record as expectations for Federal Reserve rate cuts grow and traders ramp up bets on a second Donald Trump presidency.
Spot bullion rose 0,8 percent to just below US$2 443 an ounce after increasing Monday to within US$11 of the peak set in late May.
Traders see two quarter-point rate reductions this year — a move that would traditionally benefit the non-interest bearing yellow metal — as inflation cools.
Gold is almost 20 percent higher for the year, supported by anticipation of Fed rate cuts, as well as significant buying by central banks.
Ongoing geopolitical tensions have also supported the precious metal, which is traditionally seen as a safe-haven asset.
“Optimism about US interest rate cuts as more economic data supports the case for a Fed pivot is supporting gold,” said Ewa Manthey, a commodities strategist at ING Bank. “Gold is poised to keep its positive momentum going amid the current global geopolitical and macroeconomic landscape, while central bank demand is expected to grow.”
On Monday, Fed Chair Jerome Powell said recent data had given policymakers greater confidence that inflation is heading down to the central bank’s 2 percent goal.
Traders have been adding bets there will be three cuts this year after Goldman Sachs Group said conditions were ripe for easing, with “a solid rationale” for officials to lower rates as soon as July.
Meanwhile, Trump’s candidacy gained momentum after a failed assassination attempt over the weekend and a judge dismissed a criminal case against him. -Bloomberg
Bongani Ndlovu
Online Reporter