- Gold hits a record peak of $2,141.59 per ounce
- Traders see a 68% chance of a June rate cut - FedWatch tool
March 5 (Reuters) - Gold struck a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June, with safe haven demand from war in the Middle East also tipping the scales in bullion's favour.
Spot gold gained 0.7% to $2,130.66 per ounce as of 10:39 a.m. EDT (1539 GMT), having scaled a record $2,141.59 earlier. U.S. gold futures firmed 0.6% to $2,140.00.
Bullion last hit a historic peak in December at $2,135.40.
"The big reason here is that we're seeing the market increasingly believing that a Fed rate cut is nearer rather than further away," said Bart Melek, head of commodity strategies at TD Securities.
"Markets have to be a little bit more convinced for gold to move higher, but ultimately in the second quarter, we do think it can go to over $2,300 plus."
Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of Israel-Hamas war.
"Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold," said Nitesh Shah, commodity strategist at WisdomTree.
"We wouldn't be surprised if gold gives back some of these gains as the Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher."
The Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday will be closely watched for more clarity on U.S. interest rate path. The next major U.S. economic release will be February's employment report due on Friday.
Traders currently see a 72% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool.
The non-yielding metal is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making gold costlier for overseas buyers.
Spot silver gained 0.2% to $23.94 per ounce and hit its highest since Dec. 28.
Other precious metals fell, with platinum slipping 1.6% to $883.12 per ounce, and palladium shedding 1.7% to $944.73.
Reporting by Anjana Anil and Ashitha Shivaprasad in Bengaluru, additional reporting by Swati Verma; Editing by Veronica Brown and Shailesh Kuber
Source: Reuters