Gold prices hit a new record high of $2,440.49 on Monday as slowing inflation in the U.S. boosted expectations of a Federal Reserve interest rate cut soon.
In Saudi Arabia, 24-carat gold saw a 0.60 percent rise to SAR293.53 per gram and SAR9,129.66 per ounce.
Globally, spot gold saw a 0.98 percent increase to $2,438.86 per ounce, as of 5:16 GMT, after hitting a record high of $2,440.49 earlier in the session. Meanwhile, U.S. gold futures saw a 1.05 percent increase to $2,442.80.
Interest rate cut bets
The main driver behind the rise of gold prices to their record high is the rising expectation of an interest rate cut soon in addition to a softer dollar. Hence, the dollar index maintained its downward trend, declining 0.03 percent on Monday. This makes greenback-priced bullion more attractive to buyers holding other currencies.
U.S. economic data last week revealed signs of a decline in inflation. Therefore, traders now are pricing in a 65 percent chance of a rate cut by September. Amid high inflation gold is considered a hedge. However, higher interest rates increase the opportunity cost of holding non-yielding gold. Therefore, with expectations of declining rates, demand for gold rises. Thus, the surge in prices.
Read: Oil prices edge higher ahead of Fed cues, improving demand
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