Gold prices set new record again as U.S. inflation worries loom

Author: Shailene Elizabeth Varghese

(Reuters) – Gold prices extended record gains on Wednesday, with gold traders shrugging off doubts about imminent U.S. interest rate cuts and rising Treasury yields as worries about rising inflation boosted demand for the metal as a hedge.

Spot gold was up 0.3% at $2,286.24 an ounce by 0406 GMT, having hit a record high of $2,288.09 earlier in the session, adding to consecutive record highs since Thursday.

U.S. gold futures rose 1.1% to $2,306.60.

Matt Simpson, senior analyst at City Index, said: “As attacks on Russian oil infrastructure continue, gold continues to receive safe-haven flows, ignoring rising U.S. yields and the prospect of no rate cuts from the Federal Reserve in June. .” [US/] [USD/]

Federal Reserve policymakers said on Tuesday they believed three U.S. interest rate cuts this year were “reasonable,” even as strong recent economic data cast doubt on the outcome among investors.

Data this week showed an unexpected rebound in U.S. manufacturing, with rising raw material prices raising concerns that inflation could rise again.

“With commodity prices rising broadly, that brings the risk of another round of inflation – so investors may be hedging against inflation,” Simpson said.

Gold, which is used as a hedge against inflation and as a safe haven during times of political and economic uncertainty, has gained more than 10.8% so far this year and is headed for its seventh consecutive session of gains.

Marex analysts said: “Currently, gold feels that inflation is more of a driving variable than interest rates, and part of the momentum is also driven by speculators, hedge funds and commodity funds. As soon as their quantitative systems send signals, they start to Buy gold,” said Edward Meyer.

Elsewhere, spot silver rose 1.2% to $26.41 an ounce, platinum rose 0.8% to $925.72 an ounce, and palladium edged up 0.6% to $1.009.45 an ounce.

Analysts say gold’s strong gains have not reignited enthusiasm for platinum jewelery in Asia.

(Reporting by Sherin Elizabeth Varghese and Swati Verma in Bengaluru; Editing by Sonia Cheema)

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