Gold Surges to Record $2,450 on Fed Rate-Cut Hopes

Gold soared to a record $2,450.07 an ounce in Asia on Monday. The surge is driven by growing optimism that the Federal Reserve might cut interest rates this year and heightened geopolitical tensions in the Middle East. Traders are betting that the Fed will lower borrowing costs as early as September, benefiting gold since it doesn't pay interest.

The US dollar fell and Treasuries rallied last week after April inflation data showed a larger-than-expected decline. This supported gold, which is priced in dollars.

Geopolitical concerns also boosted gold's appeal as a safe haven. A helicopter carrying Iranian President Ebrahim Raisi crashed on Sunday, and a Houthi missile hit a China-bound oil tanker in the Red Sea on Saturday.

Hedge funds increased bullish bets on gold to a three-week high, according to the Commodity Futures Trading Commission. Gold prices have broken out of a narrow trading range, rising nearly 20% this year.

Gold's rise is linked to central-bank purchases, strong demand from Asia, and geopolitical tensions in Ukraine and the Middle East. As of 10:53 a.m. in London, spot gold was up 1.2% at $2,442.92 an ounce. The Bloomberg Dollar Spot Index remained flat after a 0.7% drop last week. Silver prices climbed, while platinum and palladium stayed steady.

Silver reached its highest since December 2012, benefiting from strong investor demand and tightening supply in the metals market.