Gold prices extended a record run on Wednesday as concerns about rising inflation boosted demand for gold as a hedge, with bullion traders shaking off doubts about an impending US interest rate cut and rising Treasury yields.
Spot gold was 0.3% higher at $2,286.24 an ounce as of 0406 GMT, having hit a record high of $2,288.09 earlier in the session. Gold has hit consecutive record highs since Thursday.
U.S. gold futures rose 1.1% to $2,306.60.
“Gold continues to receive safe-haven flows as Ukraine continues to attack Russia’s oil infrastructure, to the point of ignoring rising US yields and the prospect that the Fed will not cut rates in June,” said City Index senior analyst Matt Simpson.
Federal Reserve policymakers said Tuesday they believe it is “reasonable” to cut U.S. interest rates three times this year, even as stronger recent economic data has left investors doubtful about that outcome.
Data this week showed an unexpected rebound in the US manufacturing sector, with the rise in commodity prices fueling fears that inflation could flare up again.
“With commodity prices generally rising, this brings the risk of another round of inflation – so perhaps investors are hedging against inflation,” Simpson said.
Gold, used as a hedge against inflation and as a safe haven in times of political and economic uncertainty, is up more than 10.8% so far this year and is on a seventh straight daily gain.
“Right now, gold feels like inflation is more of a driving variable than interest rates and some of the momentum is also being driven by speculators, hedge funds and commodity funds who are starting to buy gold when their quantitative systems give them signals,” said Marex analyst Edward Meir.
Elsewhere, spot silver rose 1.2% to $26.41 an ounce, platinum rose 0.8% to $925.72 and palladium rose 0.6% to $1,009.45.
Gold’s scorching rally is doing nothing to reignite enthusiasm for platinum jewelry in Asia, analysts said.
