FirstFT: Gold price hits record high

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Gold prices have 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.

Bullion rallied as much as 2 per cent to $2,111 per troy ounce this morning, a fresh all-time high, before slipping to $2,064 per troy ounce, according to Refinitiv data.

The shift higher adds to a powerful rally in motion since November last year driven by rampant central bank purchasing and geopolitical tensions because of the conflicts in Ukraine and Israel and Gaza. That demand helped the metal to rise despite a rise in real interest rates over most of the past year — something which typically dulls appetite for non-yielding gold.

The recent fall in bond yields, as investors bet that interest rates have peaked and will soon start to fall, has added extra impetus to gold’s ascent. Fed chair Jay Powell warned on Friday that the central bank could increase rates further but added that policy was already in “restrictive territory”.

Analysts warned that the precious metal might struggle to hold on to gains and trade consistently above the $2,075 per troy ounce mark unless more sustained buying comes through from a broader range of market participants.

“Traders are swimming with the tide — you have a falling dollar here, a strong seasonal period when bulls can take on the market without compunction,” said Ross Norman, chief executive of Metals Daily. Read more on the surge in the gold price.

• More market news: Bitcoin’s price jumped to almost $42,000 earlier today after a tumultuous year of scandals and setbacks. Here’s the latest on bitcoin’s recovery.

• Conquering inflation: The drop in inflation in Europe and the US deserves celebration, writes the FT’s editorial board. But, it says, to declare an end to the inflation battle — as some are doing — smacks of complacency.

Here’s what else I’m keeping tabs on today:

• Economic data: The US reports monthly factory orders and Brazil releases its latest consumer prices data.

• US Supreme court: President Joe Biden’s administration begins its challenge to the legality of Purdue Pharma’s bankruptcy settlement that would shield the wealthy Sackler family from lawsuits over their role in the country’s opioid epidemic.

• FT Business Book of the Year: The Financial Times and Schroders announce the book judged to have the most compelling and enjoyable insight into modern business issues in 2023. See the shortlist here.

Five more top stories

1. The White House has issued a blunt warning that the US will run out of funds to aid Ukraine by the end of the year. The alert was issued by Shalanda Young, the White House budget director, in a letter to congressional leaders that represented the most specific assessment yet of Washington’s waning financial and military support for Ukraine.

2. Israel has ordered the evacuation of a large area of land in southern Gaza as it stepped up an aerial bombardment of the enclave three days after a truce broke down. The evacuation order appeared to signal preparations for an Israeli offensive against Hamas in and around Khan Younis, Gaza’s second-largest city and now the largest population centre in the south. Here’s the latest on the Israel-Hamas war.

3. Venezuela’s revolutionary socialist government has trumpeted what it calls an “overwhelming victory” in a referendum on its claim to an oil and mineral-rich swath of neighbouring Guyana. The vote went ahead despite an order on Friday from the International Court of Justice for Venezuela to refrain from “taking any action” that would alter the status quo of the Essequibo region, which Guyana “exercises control over”. Here’s more on the referendum result.

4. Spotify is to axe almost a fifth of its workforce after warning that economic growth had slowed dramatically and it needed to cut costs. In a memo to staff, sent earlier today, chief executive Daniel Ek said Spotify would cut about 17 per cent of its global workforce, or about 1,500 people. Read more on the job cuts at the music streaming company.

5. A total of 8.54mn people, equivalent to about 1 per cent of working-age Chinese adults, are officially blacklisted by authorities after missing payments on everything from home mortgages to business loans, according to local courts. The number of defaults has surged since the outbreak of the coronavirus pandemic as lockdowns hobbled growth and gutted household incomes. Read the full story.

The Big Read

Three years after BlackRock chief Larry Fink put the world’s largest money manager squarely behind the cause of purpose-driven investing, a backlash has seen US Republicans relentlessly pound big banks and investment managers for being “too woke” or “hostile” to fossil fuel. While BlackRock is still betting big on the transition to a lower-carbon economy, such as a $550mn carbon capture project in Texas, Fink is emphasising the moneymaking potential rather than the contribution to the planet’s welfare.

We’re also reading . . . 

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Additional reporting by George Russell