Gold rose on Monday to an all-time high, as bullish market sentiment after the US Federal Reserve cut interest rates last week combined with geopolitical tensions drove prices despite a stronger dollar.

Spot gold gained 0.4% to $2,631.09 per ounce by 10:14am ET (1414 GMT), after hitting an all-time high of $2,634.16 earlier in the session.

“The market is still reacting to the Fed’s 50 basis point cut last Wednesday… the US central bank has signalled that it is not particularly worried about inflation and that it is going to do its best to make sure that unemployment isn’t a problem in the US,” said Bart Melek, head of commodity strategies at TD Securities.

However, the Fed is not in a “mad dash” to a neutral rate of interest as policymakers engage in a “robust” debate about how far and fast rates may need to fall, Atlanta Federal Reserve president Raphael Bostic said.

If employment rates plummet, that would get the market to believe that the Fed might get a lot more aggressive on the cutting side which is very helpful for gold, said Melek, adding that a situation of regional instability in the Middle East could also further fuel gold’s rally.

Israeli Prime Minister Benjamin Netanyahu said Israel faced “complicated days” as it stepped up strikes against Hezbollah in southern Lebanon and he called on Israelis to stay united as the campaign unfolded.

Gold, a traditional hedge against geopolitical and economic uncertainty, is headed for it best year in fourteen.

Also, read this

Oil edges higher on Middle East tensions, storm worries

UN calls for ‘immediate’ de-escalation amid escalating violence in Lebanon

Global physically backed gold exchange-traded funds (ETFs) saw modest net inflows of 3 metric tons last week, according to the World Gold Council.

Traders will be looking forward to comments from Fed officials over the week and US PCE inflation data due on Friday for further policy hints.

Spot silver fell 0.5% to $30.97 per ounce, and platinum lost 1.1% to $966.55, while palladium shed 1.7% to $1,049.25.