Gold rises to an unprecedented level

Gold prices surged to a new record high on Tuesday, driven by demand from influential investment funds despite a stronger dollar and expectations of prolonged higher US interest rates.

At 1055 GMT, gold rose 0.5 percent in spot trading to $2,262.51 per ounce, after hitting unprecedented levels at $2,266.59. This marked the third consecutive session of gold reaching all-time highs.

Saxo Bank’s Ole Hansen commented, “The underlying demand from individuals and central banks was joined by trend-setting speculators who extended their already elevated long positions after crossing the $2,200 level.”

In March, gold recorded a remarkable 9.3 percent increase, representing the largest monthly gain since July 2020. This surge was fueled by sustained demand for safe-haven assets and ongoing central bank purchases. Notably, the Chinese central bank has been increasing its gold reserves for 16 consecutive months.

Despite the US dollar’s strength following Monday’s data indicating growth in the US manufacturing sector for the first time in a year and a half, gold continued its upward trajectory on Tuesday. Traders slightly scaled back their expectations of a June interest rate cut to 56 percent following the data release, according to the CME Group’s Fed Watch service.

Gold typically thrives in environments of lower interest rates, as this diminishes the opportunity cost of holding bullion.

The positive momentum in gold extended to other precious metals as well. Silver surged 2.3 percent to $25.66 per ounce, platinum climbed 1.8 percent to $918.10, and palladium rose 3 percent to $1,026.