Before Key US Inflation Print, Gold Nears Record

Gold traded around a record $2,353.95 as investors focused on a key US inflation reading later this week. After being dragged down by increased Treasury yields in early US trading, gold rose again since it pays no interest.   

It was near the new top as traders analyzed authorities' timing of their pivot to cut borrowing costs ahead of Wednesday's March inflation report. First, the Fed needs more signs of inflation dropping before cutting this year. Gold usually loses at higher rates.  

After many record highs in recent weeks, gold remains above $2,300. It's unclear what caused the unexpected bounce that started in mid-February, especially when traders reversed bets for substantial rate cuts.  

Gold has gained more than 17% since then, partly due to optimism that the Fed will decrease rates. In March, the People's Bank of China added for the 17th straight month, indicating central bank demand.  

Other bullion has profited from Middle East tensions-driven haven demand. Israel announced Sunday that it is withdrawing troops from southern Gaza after Prime Minister Benjamin Netanyahu indicated victory was possible. Iran is preparing a retaliation to a suspected Israeli attack on its Syria embassy, while Hezbollah warned of war.  

UBS Group AG raised its year-end gold outlook by 11% to $2,500 an ounce, citing a recovery in demand for bullion-backed ETFs that might support another leg up when the Fed cuts rates mid-year.  

Senior commodity strategist Daniel Ghali wrote in a note that “the excess demand related to safe-haven buying” in the absence of new Middle East escalations could reverse bullion prices.  

Gold rose 0.4% to $2,338.82 an ounce in New York at 3:06 p.m. Bloomberg Dollar Spot Index fell. Platinum, palladium, and silver climbed.  

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