Gold hits record peak as rate cut bets burnish appeal, silver jumps

U.S. gold futures rose 1% at $2,440.60.

The main driver for gold is that there is a soft U.S. dollar and sentiment is being boosted on the basis that the Federal Reserve is expected to cut rates soon, said Kyle Rodda, a financial market analyst at Capital.com.

The dollar index remained subdued, making greenback-priced bullion more attractive to buyers holding other currencies. 

Data last week showed signs of cooling inflation and traders now expect a 65% chance of a U.S. rate cut by September.

Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.

Minutes of the Fed’s last policy meeting due on Wednesday along with comments from a slew of Fed speakers will be on investors’ radar for this week.

“Gold prices sneaked in a cheeky record high ahead of China’s (market) open on Monday. Yet as the move has not been confirmed with by a weaker U.S. dollar, it seems to have been caught a tailwind from higher metals futures on China’s exchanges,” said City Index senior analyst Matt Simpson. 

China, the top consumer of bullion and a majority of industrial metals, announced “historic” steps on Friday to stabilise its crisis-hit property sector.

According to Reuters technical analyst Wang Tao, spot gold may test resistance at $2,447 per ounce, a break above could trigger a gain to $2,455.

Spot silver rose 2.5% to $32.28 after hitting an over 11-year high.

Platinum rose 0.7% to $1,088.75, after hitting its highest since May 12, 2023. Palladium dropped 0.5% to $1,013.56.