Gold shines as price hits an all-time high

(Alliance News) - Gold captured attention on Monday, with its price hitting a new all-time height and since pulling back.

"The big story of the day was gold hitting a new all-time high," said AJ Bell's Russ Mould.

The yellow metal hit an intraday high on USD2,134 an ounce during the morning session on Monday, but then retreated amid questions around US monetary policy trajectory.

Spot gold advanced to USD2,046.09 an ounce around 1500 GMT on Monday from USD2,044.05 at the same time on Friday. Over the past 12 months, the price of the precious metal is up 14%.

"The precious metal has been driven higher by renewed violence in the Middle East, a weaker US dollar and falling government bond yields. Investors often put money into gold where there are geopolitical tensions as it is considered to be a safe-haven asset. The weaker dollar can also make gold more affordable for non-US buyers," explained AJ Bell's Mould.

"Investors increasingly believe the US central bank will start to cut interest rates next year and that could put further pressure on the dollar."

Dealers at TreasuryOne are betting that the US Fed could start to cut interest rates as early as March next year.

Fed Chair Jerome Powell said Friday it is still "premature" to speculate on when the US central bank will start cutting interest rates despite the bank's recent progress on inflation.

Looking ahead, Hargreaves Lansdown analyst Derren Nathan said that "speculation is building that there could be more to come." With talk around the price of gold increasing, investors may be more likely to put their money into the safe haven.

Meanwhile, Stephen Innes of SPI Asset Management sounded cautious around gold's latest movements.

"The problem is that no matter how rational expectations for rate cuts in 2024 might be (or at least might sound), those expectations can feed irrational overshoots in asset prices," Innes said. "The point, in fact, is today's bullion move that someone may have felt compelled to run the cold stack at the Comex open, triggering a cascade of stops, but they were quickly given a reality check when the market turned offered without a bid."

By Sophie Rose, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.