Gold prices reached a three-month peak this Monday, signalling a bullish market sentiment driven by the growing anticipation of a June interest rate cut by the U.S. Federal Reserve. The precious metal’s value surged, with spot gold climbing 1.7% to settle at $2,099.79 per ounce by 12:12 a.m. ET, marking its highest point since December 4, when it previously soared to an all-time high of $2,135.40.

This uptick in gold prices comes amid a backdrop of a weakening U.S. economy, highlighted by underwhelming manufacturing and construction spending figures, alongside subdued inflation pressures. The precious metal, often seen as a safe haven during economic uncertainties, witnessed a notable $50 increase over the last week, fueling speculation of further gains.

Market analysts are closely monitoring the Federal Reserve’s movements, with Phillip Streible, chief market strategist at Blue Line Futures in Chicago, noting, “Gold could easily push above the record highs.” Streible emphasized the significance of upcoming remarks from Fed Chair Jerome Powell and the potential impact of the U.S. jobs data on Friday, suggesting these factors could further bolster gold’s market position.

The CME Fed Watch Tool indicates a 67% probability of a Fed rate cut in June, a sentiment that supports gold’s bullish trend. “If inflation numbers remain tame, gold’s going to continue to trend higher,” commented Jim Wyckoff, a senior analyst at Kitco Metals. He highlights how high U.S. interest rates, aimed at curbing inflation, typically detract from gold’s appeal by making alternative investments like bonds more attractive and strengthening the dollar.

Moreover, geopolitical tensions have played a role in dampening short-selling activities, thereby enhancing gold’s attractiveness as a buy-on-dips asset, according to Ole Hansen, head of commodity strategy at Saxo Bank.

In related developments, London’s gold price benchmark reached a new all-time high of $2,083.15 during a morning auction, as reported by the London Bullion Market Association. Meanwhile, other precious metals also saw movements, with platinum rising 1.3% to $898.20 per ounce and palladium slightly decreasing by 0.5% to $950.37. Spot silver, however, enjoyed a 2.6% gain, reaching $23.77.

This surge in gold prices reflects broader market trends and economic indicators, pointing towards a cautious yet opportunistic approach by investors amidst uncertain economic times.