Gold clocks new record amid weakened dollar, possible end to rate hikes cycle
The dive in yields and the dollar has been a boon for non-yielding yellow metal
SYDNEY/SINGAPORE (Agencies/Web Desk) – Gold prices spiked to all-time peaks above $2,100 during intraday trading on Monday at the start of a busy week for economic data that will test market wagers for early and aggressive rate cuts from major central banks next year.
The dive in yields and the dollar has been a boon for non-yielding gold, which added 0.9 per cent to $2,088 an ounce by the time this report was filed, after hitting a record of $2,135 an ounce.
It means gold prices set a new record for the second consecutive session after climbing to $2,069.10 per ounce on Friday after remarks from Federal Reserve Chair Jerome Powell increased traders’ confidence the US central bank had completed its monetary policy tightening and could cut rates starting March.
Hence, prices were 3.4 per cent higher on the week, and earlier rose to $2,075.09 per ounce on Friday to beat the previous all-time high of $2,072.49 reached in 2020.
The rising gold demand and prices comes as the dollar started the week on a shaky footing on Monday. Against the yen, it was fetching 146.58 yen, after falling to 146.24 earlier in the session, its lowest since Sept 11. The yen has recently pulled away from the near 33-year low of 151.92 per dollar touched in the middle of November.
The Australian dollar rose to a fresh four-month high against the greenback of $0.669, while the kiwi ticked up to as high as $0.6222, its strongest level since late July.
Sterling was last trading around $1.2682, easing off a three-month high against the greenback of $1.2733 hit last week.
"Markets are piling in on the rate cut bets," Kyle Rodda, of Capital.com, said. "Gold can run higher and will do at the earliest sign of a recession."
Gold prices are on course to hit fresh highs next year and could remain above $2,000 levels, analysts said, citing geopolitical uncertainty, a likely weaker US dollar and possible interest rate cuts.
Prices of the yellow metal have risen for two consecutive months with the Israel-Palestinian conflict boosting demand for the safe-haven asset, while expectations of interest rate cuts have provided further support. Gold tends to perform well during periods of economic and geopolitical uncertainty due to its status as a reliable store of value.