(Bloomberg) — Gold hit a record high ahead of U.S. data that could offer clues as to whether the Federal Reserve’s 50-basis-point rate cut last week will be the first in a series of aggressive cuts.
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Gold rose as much as 0.4% to $2,631.13 an ounce, surpassing the previous record high hit on Friday. Traders are weighing the outlook for rates ahead of a raft of crucial economic data, including the U.S. personal consumption expenditures gauge and jobless claims, due later in the week.
Federal Reserve Governor Christopher Waller said Friday he would likely support quarter-point cuts at each of the central bank’s next two policy meetings in November and December if the economy develops as he expects. Still, he said another half-percentage point cut could be on the cards if the labor market weakens.
Still, there are signs that the rally has become too extended. Gold’s 14-day relative strength index was hovering around 70, a threshold that some investors consider overbought. Hedge funds and speculators have been adding to bullish bets on Comex, and net long positions in bullion hit their highest level in four years, according to the latest data from the Commodity Futures Trading Commission.
“The bullish momentum is undeniable, but in the short term, it could be cautious,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp., adding that bullion may find technical support around $2,580 an ounce.
Gold is also seeing support from increased safe-haven demand as traders monitor rising tensions in the Middle East, raising concerns that fighting between Hezbollah and Israel could spill over into a broader regional conflict.
Spot gold rose 0.3% to $2,629.14 an ounce by 1:09 p.m. in Singapore, after gaining 1.7% last week. The Bloomberg Dollar Spot Index was flat. Silver, palladium and platinum fell.
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