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.
Shayne Heffernan
