Gold extends record run on firm safe-haven demand, rate cut hopes

"The likelihood of rate cuts is still there, but the data is still really strong. This is an election year, so I don't think the Fed will wanna be held accountable for any kind of market crash," said Daniel Pavilonis, senior market strategist at RJO Futures.

A pair of Federal Reserve policymakers said on Tuesday they think it would be "reasonable" to cut U.S. interest rates three times this year, even as stronger recent economic data has sown investor doubts about that outcome.

Gold, a hedge against inflation and a safe haven during times of political and economic uncertainty, has climbed over 10% so far this year, helped by strong central bank buying and safe-haven demand.

Data showed U.S. services industry growth slowed further in March, while a measure of prices paid by businesses for inputs dropped to a four-year low, which bodes well for the inflation outlook.

Investors now await remarks from Fed Chair Jerome Powell later in the day for clues on when the central bank will deliver its first rate cut.

"We remain rather cautious on gold and believe there is more downside than upside to prices from current levels. That said, we also acknowledge that near-term price risks are skewed to the upside, considering the bullish market mood," said Julius Baer analyst Carsten Menke.

rose 2.6% to $26.83 per ounce, and was trading at its highest level in over two years.

Platinum was up 1.6% at $933.55 and palladium gained 0.9% to $1,013.00.