Gold hits a new high as bets on rate cuts soar

4 Dec 2023 , 10:08 AM

Monday saw a record high for gold prices above $2,100 as traders were more optimistic that the Federal Reserve would lower interest rates in the coming year.

Early Asian trading saw the price of the precious metal hit $2,135.39, surpassing the previous record high established in 2020 during the pandemic.

With the start of the Israel-Hamas conflict, traders have poured money into bullion in recent weeks as a safe haven investment.

It has gained additional support as a series of data indicators indicate a slowing in inflation, sparking speculation that the Fed may lower rates.

The dollar has been pushed down by bets on a rate decline, which has reduced the price of gold for buyers abroad.

After Fed Chairman Jerome Powell warned on Friday that interest rates are ‘well into restrictive territory,’ traders started moving into the metal, stoking speculation that the bank may soon start reducing.

According to Bloomberg, traders fully priced such a move for May, but in March they projected a 60 percent possibility of it.

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