Gold hits record high on expectations of Fed rate cuts
- Gold surged to a fresh record high on Monday as traders bet the Federal Reserve will cut interest rates sooner than expected.
- The precious metal climbed to as high as $2,135 an ounce, surpassing the all-time peak set in 2020.
- The rally came after Fed Chair Jerome Powell said Friday that the central bank was “well into restrictive territory” after more than a year of interest rate hikes.
- Traders interpreted Powell’s remarks as a signal that the Fed is nearing the end of its tightening cycle and could even start cutting rates next year.
- The prospect of lower rates boosted gold’s appeal as an inflation hedge and made the dollar less attractive, which further supported gold prices.
Bitcoin breaks above $40,000
- Bitcoin broke back above $40,000 for the first time since May last year, helped by hopes that US regulators will approve the first spot Bitcoin exchange-traded funds (ETFs).
- The cryptocurrency rose as much as 3.5% to $40,149, its highest level since May 11.
- The gains came as Bloomberg reported that the Securities and Exchange Commission (SEC) could approve a batch of spot Bitcoin ETFs as early as next month.
- Spot Bitcoin ETFs would track the price of Bitcoin itself, rather than futures contracts, which are currently the only way to get exposure to the cryptocurrency in an ETF wrapper.
- The approval of spot Bitcoin ETFs would be a major milestone for the cryptocurrency and could help it attract more institutional investors.
China Evergrande given extension to avoid liquidation
- Troubled Chinese developer China Evergrande was given an extension by a Hong Kong court to put together a restructuring plan to avoid liquidation.
- The company has until late January to present its plan, which was previously due in December.
- Evergrande defaulted on a debt repayment in 2021 and has reported more than $300 billion in liabilities.
- The company is facing a winding-up petition from creditors and could be liquidated if its restructuring plan is not deemed viable.
- The case has dragged on for months as parties have tried to broker a deal out of court.
- Judge Linda Chan adjourned the case until January 29 and urged Evergrande’s lawyers to seek “more direct discussion with relevant authorities” to confirm the feasibility of the company’s restructuring plan.