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Gold price hits all-time high as traders bet on interest rate cuts

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The price of gold has surged to an all-time high, boosted by a fall in the US dollar as traders ratchet up their bets that the Federal Reserve will cut interest rates next year.

The haven asset rallied as much as 3 per cent to $2,135 per troy ounce on Monday, a new record, before slipping to $2,025 per troy ounce, according to LSEG data. The latest rise has been driven by a 3.1 per cent fall in the dollar against a basket of six other currencies since the start of November, which has left it slightly above its lowest level in nearly four months.

The fall — alongside a drop in US Treasury yields since mid-October — has come as investors have grown more confident that the Fed will lower borrowing costs early next year.

Gold’s gains are the latest leg in a powerful rally that began in November last year, driven by rampant central bank purchasing and investor concerns over the conflicts in Ukraine and in Israel and Gaza.

That demand lifted the price of the yellow metal, in spite of a rise in real interest rates over most of the past year — something that would normally be expected to reduce appetite for non-yielding gold. Gold reached its previous record high of $2,072.49 per troy ounce in August 2020 when the coronavirus pandemic was hitting the US economy, leading investors to snap up the precious metal.

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