The price of %Gold has risen to an all-time high of $2,135.90 U.S. as traders bet that the U.S. Federal Reserve will start cutting interest rates in June of this year.
Gold is now at its highest level since futures contracts for the precious metal were first created back in 1974. The previous all-time high for gold’s price was $2,095.70 U.S.
Gold’s price jumped after recent data showed inflation in the U.S. continuing to decline, raising expectations that the American central bank will start lowering interest rates this summer.
When interest rates fall, gold prices typically rise as investors seek a safe haven as assets such as bonds become less attractive because they no longer offer attractive yields.
The price of gold has also benefitted from the fact that central banks have been buying lots of the precious metal in recent months as conflicts continue in Ukraine and the Middle East.
While analysts and investors are cheering the new all-time high, some market observers warn that gold prices could come under pressure if economic data, particularly on the U.S. labour market, comes in hotter than expected.
So far this year, the price of gold has risen nearly 3%, bringing its 12-month increase to 15%.
