Gold pulled back slightly from Monday’s record high of $2,956.19 as some investors booked profits, but prices remain well supported by shifting expectations for Federal Reserve rate cuts and growing demand for safe-haven assets.
Worries about the US economy have caused markets to bring forward the anticipated timing of Fed easing. Traders are now pricing in a quarter-point rate cut as soon as July, roughly two months earlier than they expected last week. That change in the monetary outlook tends to boost interest in non-yielding assets such as gold.
Geopolitical tensions are also providing meaningful support for bullion. Recent measures by President Trump aimed at China could strain relations between the world’s two largest economies, while simultaneous actions increasing pressure on Iran add to global uncertainty. At the same time, Treasury yields have slipped after a record-setting two-year note auction and weaker-than-expected US business activity data, reinforcing gold’s appeal.
These forces have helped drive the biggest inflows into gold-backed exchange-traded funds since 2022, contributing to gold’s roughly 12% rally so far this year. Market participants are now focused on Friday’s core personal consumption expenditures (PCE) price index—the Fed’s preferred measure of inflation—for fresh signals on the central bank’s policy path and potential implications for precious metals.