Gold hits all-time high despite Fed's efforts to temper optimism

The precious metal rose more than 3 percent in early trading on Monday, reaching 2,148.11 dollars, surpassing the level seen on August 7, 2020, and hitting an all-time high. It subsequently gave back most of those gains and is currently trading at 2,085.81 dollars, up 0.72 percent from Friday.

The rally in bullion, which has been ongoing since early October, accelerated on Friday after Fed Chair Jerome Powell's comments that monetary policy was "moving into restrictive territory" led to a decline in the dollar and Treasury bond yields, a positive development for gold.

Powell later attempted to push back against interest rate cut optimism, warning that it would be "premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease." Despite this, swap markets currently see about a 55 percent chance of a cut in March and have fully priced in a cut by May.

Chris Weston, head of research at Pepperstone Group Ltd., said there has been a "major momentum shift" in gold. However, Weston noted that U.S. labor data due later this week, along with forecasts for lower real interest rates for next year, could pose a downside risk for bullion.

News Source: 12punto