Gold prices hit record highs above $2,300 amid mixed rate cut cues

Investing.com-- Gold prices hit record highs in early Asian trade on Thursday, as the yellow metal benefited from weakness in the dollar amid uncertainty over U.S. interest rate cuts, while increased safe haven demand also aided prices.

Persistent geopolitical tensions in the Middle East and between Russia and Ukraine, coupled with a devastating earthquake in Taiwan, spurred safe haven plays into bullion and other precious metals. 

Gold was further boosted by steep declines in the dollar, as Federal Reserve officials reiterated that the central bank was likely to cut interest rates in 2024, although they gave scant cues on the potential timing of the move.

Spot gold rose to a record high of $2,302.58 an ounce, while gold futures expiring in June hit a record high of $2,322.25 an ounce. 

Gold prices benefit from weaker dollar, rate cut uncertainty persists 

Bullion prices were supported by a drop in the dollar, as the dollar index sank nearly 1% after hitting a 4-½ month high earlier this week.

Mixed cues on interest rates from the Fed were a key weight on the greenback. Fed Chair Jerome Powell said on Wednesday that while the central bank will still eventually cut interest rates in 2024, he offered few cues on the timing and scope of the potential cuts.

This uncertainty boosted demand for gold, which hit record highs for a third straight session. 

Other precious metals also advanced. Platinum futures rose 0.1% to $953.15 an ounce, while silver futures rose 0.7% to $27.238 an ounce.

More Fed speakers, nonfarm payrolls on tap 

Beyond Powell, other members of the Fed’s rate-setting committee are also set to speak later this week. FOMC members Michelle Bowman and Thomas Barkin are set to speak at separate events later on Thursday.

Their comments come after several other Fed officials warned over the past week that sticky inflation was likely to delay any early interest rate cuts. 

But the main event this week will be nonfarm payrolls data for March, due on Friday. Sticky inflation and strength in the labor market are the two biggest considerations for the Fed in altering interest rates this year.

More cues on U.S. interest rates are likely to determine just how high gold can push, given that the yellow metal has moved inversely to the dollar and Treasury yields over the past two years.