BENGALURU - Gold scaled a record high on March 5, moving further above US$2,100 an ounce in a rally sparked by growing bets for a United States interest rate cut in June and on safe-haven demand due to the conflict in the Middle East.

On March 6, spot gold was steady at US$2,127.39 per ounce, as of 8.29am GMT (4.29pm Singapore time), having hit a record US$2,141.59 in the previous session. Bullion last hit a record high in December at US$2,135.40.

“The big reason here is that we’re seeing the market increasingly believing that a Fed rate cut is nearer rather than further away,” said TD Securities head of commodity strategies Bart Melek.

“Markets have to be a little bit more convinced for gold to move higher, but ultimately in the second quarter, we do think it can go to over US$2,300 plus.”

Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed by more than US$300 (S$400) since the start of the Israel-Hamas war.

“Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold,” WisdomTree commodity strategist Nitesh Shah said. “We wouldn’t be surprised if gold gives back some of these gains as the US Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher.”

Fed chair Jerome Powell’s congressional testimony on March 6 and 7 will be closely watched for more clarity on the US interest rate path. The next major US economic release will be February’s employment report due on March 8.

Traders currently see a 70 per cent chance that the Fed will start cutting rates by June, according to the CME FedWatch tool.

Gold is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making the precious metal costlier for overseas buyers. REUTERS