(Bloomberg) -- Gold extended gains to bring it within touching distance of an all-time high, as speculation over a Federal Reserve pivot and geopolitical risks underpinned the precious metal’s rally.

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Bullion jumped as much as 0.6% to $2,127.37 an ounce, just shy of the record $2,135.39 set on Dec. 4 last year.

Gold has added almost $100 in the past five sessions, fueled by a combination of geopolitical tensions, expectations for monetary easing and the risk of a pullback in equity markets. The scale of the recent move has surprised some market watchers, who say it may be partially driven by momentum.

The rising risk of a stock market correction — flagged by weak US manufacturing data on Friday — may have persuaded some investors to move out of equities and into gold, said Ole Hansen, commodity strategist at Saxo Bank A/S.

While the timing of the Fed’s pivot remains uncertain, signs that it’s getting closer have supported gold since mid-February. Swaps markets show an almost 60% chance of a rate cut in June, a higher probability than early last month. Lower borrowing costs are typically positive for the precious metal, which doesn’t offer any interest.

That uncertainty has prompted some analysts to question the sustainability of gold’s recent advance.

“We think the rally is fragile,” said Thu Lan Nguyen, head of commodity research at Commerzbank AG. “We would not be surprised to see a small downward correction in the coming days on the back of profit taking.”

Gold’s role as a haven asset is being underlined by elevated geopolitical risks, with attacks on shipping in the Red Sea showing escalating Middle East tensions. China’s economic woes and the US presidential election at the end of the year make it a potentially volatile mix.



Spot gold was trading 0.5% higher at $2,123.84 an ounce as of 10:54 a.m. in London. The Bloomberg Dollar Spot Index was steady. Silver was little changed, while platinum and palladium edged lower.

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