Article by: ETO Markets

Gold prices gained momentum, hitting a record high near $2,450 during the European session. This surge was driven by renewed expectations of interest rate cuts from the US Federal Reserve (Fed) and escalating geopolitical tensions in the Middle East.

Geopolitical Tensions Boost Safe-Haven Demand**: Heightened conflicts between Russia and Ukraine, with both nations launching attacks over the weekend, further bolstered demand for the safe-haven asset.

Later today, gold traders will be closely watching speeches from Fed officials including Bostic, Barr, Waller, Jefferson, and Mester. Their comments on monetary policy could influence gold prices, especially if they signal a cautious or hawkish stance.

Key Market Movers for Gold

1. Middle East Unrest: Iranian state television reported no signs of life at the crash site of the helicopter carrying Iran's President Ebrahim Raisi, adding to regional instability.

2. US Inflation Outlook:
   - Richmond Fed President Thomas Barkin noted that while inflation is easing, it will take more time to reach the Fed’s 2% target.
   - Cleveland Fed President Loretta Mester believes the current monetary policy stance is appropriate, pending further economic data.
   - Fed Governor Michelle Bowman indicated that although policy is restrictive, she supports rate hikes if inflation does not improve.

3. Rate Cut Expectations: The CME Fed Watch tool shows a 10% probability of a rate cut in June and nearly 80% chance in September, reflecting market sentiment.

4. China’s Gold Purchases: The People's Bank of China (PBoC) added 60,000 troy ounces of gold to its reserves in April, marking the 18th consecutive month of gold purchases.