BENGALURU- Gold prices extended gains to scale a record high on Monday, driven by the momentum generated by the Federal Reserve’s interest rate cut and safe-haven demand due to geopolitical risks in the Middle East.

Spot gold rose 0.2 percent  to $2,628.28 per ounce, after hitting a record high of $2,630.93 earlier in the session. Non-yielding gold is up over 27 percent  so far this year, heading for its biggest annual rise since 2010.

US gold futures gained 0.3 percent  to $2,653.00.

“The current state of play in the global economy, which consists of declining interest rates, seemingly ever-present geopolitical risks and an upcoming US election has suited gold to a tee,” Tim Waterer, chief market analyst at KCM Trade, said.

“If the Fed stays committed to its rate-cutting cycle in the coming months then any pullback in gold will likely have buyers waiting in the wings, with investors potentially eyeing off some better entry points.”

The US Fed began its easing cycle with a half-percentage point rate cut on Wednesday, forecasting another half-point cut by year-end and a full point next year.  – Reuters

Fed futures traders have priced in 75 basis points in rate cuts by the end of this year, according to CME FedWatch.

Lower rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset amid economic and political turmoil.