Gold shines brightest today. What happens in the markets?

The absolute protagonist of the markets today is gold.
In the Asian session, stocks in the region traded mixed as the precious metal hit record highs above $2,100.
In detail, the price of gold reached a record high of $2,144 at the start of this trading day.
The surge was triggered by growing bets on a Fed rate cut in March and new geopolitical concerns caused by high tension between Yemen's Houthis and the United States and the Israel-Hamas war.
In Asian trade, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, led by gains in South Korea and Australia.
Japan's Nikkei fell 0.6% as the yen extended recent gains.
Chinese blue chips fell 0.5% and Hong Kong lost more than 1%.
In this stock uncertainty, the leap in gold surprised and captured all the attention of investors in the markets at the beginning of December.
Record gold: what happens to the precious metal? The price of gold rose more than 3% in early trading on Monday, December 4, surpassing the previous all-time high reached on August 7, 2020, before paring most of those gains.
The bullion rally that has been ongoing since early October strengthened on Friday, as comments from the Fed chair that monetary policy is now in just the right amount of tightening territory spurred a decline in the dollar and yields of the Treasury, a positive factor for non-interest-bearing gold.
The precious metal price also benefited from a fresh boost towards safe-haven assets, in the wake of geopolitical risks that emerged between Yemen and the United States over the weekend.
The US military said on Sunday that Yemen's Houthi rebels fired ballistic missiles and hit three commercial ships in the Red Sea.
In retaliation, an American warship shot down three drones during the hours-long assault.
These tensions add to the conflict between Israel and Hamas, with the truce already over.
The Israeli army has resumed combat operations in Gaza.
The price of gold is considered a traditional safe haven asset and tends to benefit from escalating geopolitical tensions.
However, analysts note that another safe-haven asset, the US dollar, is failing to draw inspiration from geopolitical threats as bets for a Fed interest rate cut in March increase, with markets pricing in a probability of up to 60%.
% of a decrease in the cost of money in the spring.
In this context, gold has received the necessary boost to shine more than other assets.
Typically, during times of economic and geopolitical uncertainty, bullion is attractive due to its status as a reliable store of value.
Finally, a recent survey by the World Gold Council (WGC) revealed that 24% of all central banks intend to increase their gold reserves in the next 12 months, as they are increasingly pessimistic about the US dollar as a reserve asset.
This encouraging news boded well for the price of gold.
What to expect about gold? Heng Koon How, strategist at UOB estimated that gold prices could reach $2,200 by the end of 2024: “The expected retreat of both the dollar and interest rates in 2024 is a key positive factor for gold” .
Bart Melek, head of commodity strategies at TD Securities, expects the precious metal to average $2,100 in the second quarter of 2024, with heavy central bank buying serving as a key catalyst to lift prices.
A Fed policy shift will also likely emerge in 2024, he added.
Lower interest rates tend to weaken the dollar, and a weaker dollar makes gold cheaper for international buyers, thus increasing demand.
According to Fxstreet, looking ahead, it remains to be seen whether the price of gold will find new momentum to resume rising, as the US dollar could draw support from geopolitical tensions in the Middle East.
The price of gold will remain at the mercy of greenback dynamics and Fed expectations as US Treasury yields take a breather from the recent sell-off.