(Bloomberg) — Gold rose to a record as the second quarter kicked off, extending a rally that’s been driven by the Federal Reserve moving closer to rate cuts and deepening geopolitical tensions.

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Bullion jumped as much as 1.2% to $2,256.44 an ounce early on Monday, after setting a series of all-time highs in recent sessions.

The Fed’s preferred gauge of underlying inflation cooled in February, data showed on Friday, when many markets were closed. That adds to the case for a reduction in borrowing costs, although the US central bank has been striking a cautious tone. Swaps markets are pricing in a 61% chance of a cut in June, up from 57% on Thursday. Lower rates are positive for gold, which doesn’t offer any interest.

The precious metal jumped more than 8% in the first quarter on the prospect of monetary easing by major central banks, and persistent tensions in the Middle East and Ukraine that have bolstered its have appeal. There’s been strong buying by central banks, particularly in China, while consumers there have also been loading up on bullion amid ongoing problems in Asia’s largest economy.

Spot gold rose 1% to $2,252.15 an ounce as of 8:50 a.m. in Singapore, after climbing 3% last week. The Bloomberg Dollar Spot Index dipped 0.1%, while silver, platinum and palladium all traded higher.

Gold’s positive prospects have been endorsed by a slew of leading banks. Among them, JPMorgan Chase & Co. said last month that the metal was its No. 1 pick in commodities markets, and the price may reach $2,500 an ounce this year. Goldman Sachs Group Inc. said it sees potential for $2,300 an ounce, highlighting the benefits from a lower interest-rate environment.

Still, gold’s ascent has yet to strike a chord among investors who favor exposure to the metal through exchange-traded funds. Worldwide holdings in bullion-backed ETFs shrank by more than 100 tons in the first quarter, hitting the lowest level since 2019 in mid-March, before a small uptick, according to a Bloomberg tally.

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