Opinion: Gold touches record high, driven by rate cut expectations and safe-haven demand

Gold prices hit another record high on Thursday after the US released modest inflation data in favour of Fed easing, in addition to escalating trade tensions that sparked safe-haven buying. According to a report released by the US Bureau of Labor Statistics on Thursday, US wholesale inflation stagnated in February due to a decline in the cost of services. In addition, the consumer price index released on Wednesday was weaker than expected, have strengthened expectations that the Federal Reserve may cut interest rates in the near future. The report ‘suggests that demand is slowing as a result of declining confidence, leaving room to loosen the restrictive nature of monetary policy,’ said Bart Melek, global head of commodities strategy at TD Securities. ‘Gold is behaving like a hedged asset, moving in the opposite direction of risk assets like equities.’ Institutions are increasingly convinced that Trump's destructive trade policies coupled with other concerns will push the price of gold further higher. Macquarie Group expects a spike to $3,500 in the second quarter, and BNP Paribas has raised its estimate for the average price of gold to well above $3,000.