Gold prices extended gains to scale a record high on Monday, driven by the momentum generated by the Federal Reserve’s interest rate cut and safe-haven demand due to geopolitical risks in the Middle East.

Spot gold rose 0.2% to $2,628.28 per ounce, as of 0349 GMT, after hitting a record high of $2,630.93 earlier in the session. Non-yielding gold is up over 27% so far this year, heading for its biggest annual rise since 2010.

U.S. gold futures gained 0.3% to $2,653.00.

“The current state of play in the global economy, which consists of declining interest rates, seemingly ever-present geopolitical risks and an upcoming U.S. election has suited gold to a tee,” Tim Waterer, chief market analyst at KCM Trade, said.

“If the Fed stays committed to its rate-cutting cycle in the coming months then any pullback in gold will likely have buyers waiting in the wings, with investors potentially eyeing off some better entry points.”

The U.S. Fed began its easing cycle with a half-percentage point rate cut on Wednesday, forecasting another half-point cut by year-end and a full point next year.

Fed futures traders have priced in 75 basis points in rate cuts by the end of this year, according to CME FedWatch.

Gold breaks $2,600 barrier as Fed cut bets prolong historic run

Lower rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset amid economic and political turmoil.

Elsewhere, Hezbollah and Israel exchanged heavy fire into Sunday, with the Lebanese militant group launching rockets deep into northern Israel amid intense bombardment, marking one ofthe most significant escalations in nearly a year of conflict.

For this week, traders will be looking forward to comments from Fed officials and U.S. PCE inflation data due on Friday, for further policy hints.

Spot silver edged 0.1% lower to $31.07 per ounce, platinum fell 0.8% to $967.50 and palladium shed nearly 1% to $1,057.38.