Gold hits record high as Fed rate cut expectations rise

Gold prices surged to unprecedented levels following reports indicating a moderation in US inflation during February, heightening expectations for an interest rate cut by the Federal Reserve in June.

Spot gold increased by 1 percent to $2,255.39 per ounce as of 0103 GMT, reaching a peak of $2,256.09 per ounce earlier in the trading session. Meanwhile, US gold futures rose by 1.7 percent to $2,275.70 per ounce.

The weakening dollar, experiencing a 0.1 percent decline against its counterparts, enhanced the attractiveness of gold for holders of other currencies.

Federal Reserve Chair Jerome Powell expressed satisfaction with the latest US inflation figures, stating they align with the central bank's objectives. The Commerce Department's Bureau of Economic Analysis reported a 0.3 percent increase in the Personal Consumption Expenditures (PCE) price index for February.

Traders are factoring in a 69 percent likelihood of the Federal Reserve initiating rate cuts in June, according to the CME Group's FedWatch Tool, which in turn reduces the opportunity cost of holding gold.

Other developments

In addition to the gold market dynamics, other notable developments include China witness of an expansion in manufacturing activity for the first time in six months in March, providing a sense of relief to policymakers amidst ongoing challenges in the property sector.

Nornickel, the world's largest palladium producer, disclosed that some European Union clients had declined purchases of products made with Russian metals.

Spot silver climbed 1 percent to $25.22 per ounce, platinum increased by 0.6 percent to $913.85, and palladium rose by 0.3 percent to $1,018.22 per ounce.