Gold prices surge again on prospects for US rate cuts 

Gold, a hedge against inflation and a safe haven during times of political and economic uncertainty, has climbed over 11% so far this year. Picture: Chalinee Thirasupa/Bloomberg

Gold prices have raced to a record high yet again, after US Federal Reserve chair Jerome Powell reiterated that recent readings on job gains and higher-than-expected inflation do not materially change the overall picture of economic policy this year.

Spot gold rose 0.5% to $2,292.31 (€2,115.91) an ounce. “Gold surged to yet another historic high on elevated trading volume after Powell stresses ‘bumps’ in the road do not change the overall rosy picture,” said metals trader Tai Wong.

“Powell’s customary cautious approach doesn’t worry gold bulls...I think bulls want to see $2,300 and I think more ‘tourists’ are getting involved in the trade,” the trader said. 

Mr Powell said “if the economy evolves broadly as we expect”, he and his Fed colleagues largely agree a lower policy interest rate will be appropriate some time this year.

Investors still expect a first rate cut at the Fed’s June 11-12 policy meeting, even as stronger recent economic data has sown investor doubts about that outcome. 

Gold, a hedge against inflation and a safe haven during times of political and economic uncertainty, has climbed over 11% so far this year, helped by strong central bank buying and safe-haven demand. 

The US jobs report for March is due to be released tomorrow, with new inflation data next week. 

A pair of Federal Reserve policymakers said this week they think it would be reasonable to cut US interest rates three times this year. 

“The likelihood of rate cuts is still there, but the data is still really strong. This is an election year, so I don’t think the Fed will want to be held accountable for any kind of market crash,” said Daniel Pavilonis at RJO Futures.

• Reuters