Gold reached a new high on Monday, as rising expectations that the Federal Reserve will cut interest rates in the new year have weakened the dollar in recent weeks.
The precious metal, regarded as a safe haven investment, reached an all-time high of $2,135.39 per ounce.
Profit-taking set in later, causing it to trade at $2,069.01. The dollar was also stronger on Monday.
According to analysts, gold is also benefiting from the Israel-Hamas conflict.
“Concerns about the shaky global economic backdrop and the Israel-Hamas conflict have fuelled investor demand for safe-haven assets like gold,” said Victoria Scholar, head of investment at Interactive Investor.
“Plus, expectations for Fed rate cuts next year have put downward pressure on the US dollar which is trading around three-month lows, adding to gold’s attractiveness.”
In other news, bitcoin traded above $40,000 for the first time since May of last year, boosted by hopes that the United States will soon allow wider trading in the world’s largest cryptocurrency.
Europe and Asia’s major stock markets fell the most, while oil prices fell.
Traders are dismissing Fed Chairman Jerome Powell’s efforts to cool expectations of US rate cuts in the first quarter of 2024.
Bets on monetary policy easing increased after Powell said Friday that the Fed was “well into restrictive territory” after more than a year of hikes that have raised borrowing costs to a two-decade high.
Global central banks have raised interest rates, which has aided in bringing down inflation.
According to Bloomberg, traders see a 60% chance of a US rate cut, with one fully priced in for May.
“Markets are piling in on the rate cut bets,” said Kyle Rodda at Capital.com.
He also stated that the prospect of a recession increased the appeal of gold.
Bitcoin reclaimed the $40,000 barrier on hopes that firms such as BlackRock would be granted US approval to sell the first spot Bitcoin exchange-traded funds.
According to Bloomberg, the Securities and Exchange Commission is expected to approve a batch of the products by next month.
In equities trading, troubled developer China Evergrande surged more than 13% after a court in the city granted more time to develop a restructuring plan aimed at avoiding liquidation.
The company, which missed a debt repayment in 2021 and has more than $300 billion in liabilities, was served with a winding-up petition and faces liquidation if officials decide its proposal is inadequate.
– Key figures around 1045 GMT –
London – FTSE 100: DOWN 0.4 percent 7,497.66 points
Paris – CAC 40: DOWN 0.3 percent at 7,327.18
Frankfurt – DAX: FLAT at 16,397.96
EURO STOXX 50: DOWN 0.2 percent at 4,409.85
Tokyo – Nikkei 225: DOWN 0.6 percent at 33,231.27 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent at 16,646.05 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,022.91 (close)
New York – Dow: UP 0.8 percent at 36,245.50 points (close)
Euro/dollar: DOWN at $1.0866 from $1.0883 on Friday
Pound/dollar: DOWN at $1.2660 from $1.2708
Dollar/yen: DOWN at 146.57 yen from 146.84 yen
Euro/pound: UP at 85.81 pence from 85.60 pence
West Texas Intermediate: DOWN 0.7 percent at $73.55 per barrel
Brent North Sea crude: DOWN 0.7 percent at $78.33 per barrel
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