Gold hit a record high Monday as growing optimism that the Federal Reserve will cut US interest rates in the new year has dented the dollar in recent weeks.
The precious metal, seen as a haven investment, reached an all-time pinnacle at $2,135.39 an ounce. Profit-taking later set in, leaving it to trade at $2,069.01. The dollar was also firmer Monday. Gold is benefitting also from the Israel-Hamas war according to analysts.
"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."
Elsewhere, bitcoin traded above $40,000 for the first time since May last year, boosted by hopes that the United States would soon allow broader trading of the world's biggest cryptocurrency.
Major stock markets mostly fell in Europe an Asia, while oil prices dropped.
Traders are shrugging off Fed boss Jerome Powell's attempts to temper expectations of US rate cuts in the first quarter of 2024.
Bets on an easing of monetary policy were ramped up when Powell said Friday that it was "well into restrictive territory" after more than a year of hikes that have put borrowing costs at a two-decade high.
Central banks around the globe have sent interest rates soaring, helping to bring down surging inflation.
Bloomberg reported that traders saw a 60 percent chance of a US rate cut, while they have fully priced in one in May.
"Markets are piling in on the rate cut bets," said Kyle Rodda at Capital.com.
He added that recession risks added to gold's appeal.
Bitcoin broke back above $40,000 on hopes that firms including BlackRock would be given US approval to sell the first spot Bitcoin exchange-traded funds.
Bloomberg said a batch of the products are thought to be given the go-ahead by the Securities and Exchange Commission by next month.
In equities trading, troubled developer China Evergrande briefly surged more than 13 percent after a court in the city allowed extra time to form a restructuring plan aimed at avoiding liquidation.
The firm, which defaulted on a debt repayment in 2021 and has reported more than $300 billion in liabilities, was hit with a winding-up petition and faces liquidation if officials decide its proposal is not sufficient.
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