Gold reached a record high on Monday, as rising expectations that the Federal Reserve may decrease interest rates in the new year have weakened the dollar in recent weeks.
Gold which is 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 observers, gold is also benefiting from the Israel-Hamas conflict.
“Concerns about the shaky global economic backdrop and the Israel-Hamas conflict have fueled 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.”
He also stated that the prospect of a recession increased the appeal of gold.
In other news, Bitcoin rose above $40,000 for the first time since May of last year, spurred by the anticipation that the United States may soon allow wider trading in the world’s largest cryptocurrency.
Major stock markets in Europe and Asia declined as oil prices fell.
Traders are dismissing Fed Chairman Jerome Powell’s efforts to reduce expectations of US rate cuts in the first quarter of 2024.
Bets on monetary policy easing increased after Powell acknowledged Friday that the Fed was “well into restrictive territory” after more than a year of rises 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% possibility 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.
