Gold price glitters as traders bet big on falling interest rates

Have markets got ahead of themselves over cuts to interest rates, asks James Moore

The gold price has been hitting new highs as the dollar falls in value (PA)

Gold is glittering in the eyes of the markets. The precious metal, object of desire, useful electrical conductor – a favourite of jewellers and makers of dental fillings – is approaching Pepper X chili levels of heat.

It surged to as much as $2,111 per troy ounce in early trading on Monday – a record price – before slipping back a little. It is worth remembering, however, that today’s money is worth a lot less than it was during the pandemic, when gold was last this high. It would need to go higher still to reach an inflation-adjusted record.

It might do that. In theory, gold should have been unloved during the recent interest rate cycle. It pays no dividend. In fact, there is a cost to holding it in terms of storage and insurance. Higher rates ought to make for more attractive places to store money.