Gold prices extended their rally and scaled to another record high on Monday, propelled by U.S. interest rate cut expectations and the metal’s appeal as a safe haven asset.

Spot gold added 0.6% to trade at $2,245.79 per ounce. U.S. gold futures rose more than 1% to trade at $2,266.39 per ounce.

“I think it’s a really exciting moment in gold,” said Joseph Cavatoni, market strategist at the World Gold Council told CNBC on Monday. “What’s really driving it is, I think, many market speculators really getting that confidence and comfort [in] the Fed cuts,” he said.

Market watchers are expecting the U.S. Federal Reserve to cut rates in May or June.

The key Fed inflation gauge for February climbed 2.8% year-on-year, according to data released last Friday — likely to keep the U.S. central bank on hold before it can start considering interest rate cuts.

The Fed stood pat on interest rates at the conclusion of its recent March meeting, but stuck with its forecast for three interest rate cuts this year.

Gold prices tend to share an inverse relationship with interest rates. As interest rates fall, gold becomes more appealing compared to fixed-income assets such as bonds, which would yield weaker returns in a low-interest-rate environment. 

Bullion prices were also driven higher by overseas demand, according to Caesar Bryan, portfolio manager at investment management company Gabelli Funds.

“In China, private investors have been attracted to gold because the real estate sector has done poorly,” Bryan said, adding that China’s general economy has remained weak and its stock market and currency have not been performing well.

The gold rally so far has been fueled by robust purchases from the world’s central banks in a bid to diversify reserve portfolios due to geopolitical risks, domestic inflation and U.S. dollar’s weakness, said Cavatoni from the World Gold Council.

“Really strong case for them to continue to buy … [but] let’s see if they continue to be as large and for as long,” he added.

China is the leading driver for both consumer demand and central bank gold purchases, according to data from the WGC.