Gold price glitters as traders bet big on falling interest rates

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.