Gold reached a new all-time high on Monday as investors became more certain that the Federal Reserve will reduce interest rates this year, despite a small increase in an important inflation report. The valuable metal has seen strong demand for purchases this year due to indications from the US central bank that credit conditions may become more relaxed.

On Monday, it reached a record high of $2,256.44, as reported by Bloomberg News. The PCE index, a key measure of inflation used by the Fed, increased slightly in March compared to February, but the core reading decreased slightly. Powell mentioned that the report matched what they were expecting and that policymakers were on course to reach their goal of keeping inflation at two percent in the long run.

He mentioned that although the latest inflation numbers were higher than desired by the Fed, the February data was "certainly closer to what we hope to observe". The information seemed to not influence traders' beliefs about a possible decrease in interest rates in June, even though Powell cautioned that rates are unlikely to drop as low as they did after the 2008 worldwide financial crisis.

Contributing to the increase in prices is the desire for security during times of conflict due to rising political tensions, particularly with worries that Israel's conflict with Hamas in Gaza will escalate. An aerial attack in Lebanon on Sunday increased tensions, with Israel claiming that a leader of a Hezbollah missile unit had been "taken out".

Israel and the group supported by Iran have been trading gunfire across the border almost every day for several months. In the meantime, traders are also closely monitoring the ongoing Ukraine conflict. Since bullion does not earn interest, it gains an advantage when central banks reduce interest rates because its status as a safe investment becomes more appealing to investors.