Gold surged to a new all-time high as growing expectations for US rate cuts early next year spurred a rush of buying.

The precious metal leaped by more than 3% in early trading on Monday to hit a record $2,135.39 an ounce, surpassing the previous all-time high it set in August 2020, before paring its gains.

The latest leg of gold’s rally has been turbocharged by comments on Friday from Fed Chair Jerome Powell that traders interpreted as setting the stage for a pivot toward rate cuts, spurring a plunge in the dollar and Treasury yields.

But the precious metal’s strength has been underpinned by a wider array of factors, from a wave of purchases by governments and central banks to geopolitical uncertainty, with 41% of the world’s population due to go to the polls next year.

Gold “is the answer for many things at the moment – whether it’s inflation carrying on, rate cuts or the uncertainty with very costly wars going on,” said Jo Harmendjian, portfolio manager at Tiberius Group AG.

Gold has risen more than 600% since the turn of the millennium, though adjusted for inflation it remains below the high of $850 touched in January 1980, which would be equivalent to more than $3,000 in today’s dollars.

The yellow metal typically has an inverse relationship with bond yields, falling as rising interest rates offer a more appealing alternative to gold, which pays no interest, and rising as they fall.

It has rallied about 14% since early October, as Treasury yields and the dollar have fallen amid growing expectations for US rate cuts. Swaps markets now see a more than 50% chance of a reduction in March and are pricing in a cut in May.

Some analysts argued that Monday’s move was overdone, and prices retreated after hitting the record high to trade at $2,062 by early afternoon in London.

The sharp move early on Monday looks like it was “more driven by stop-loss orders,” said Kelvin Wong, a senior market analyst at Oanda Asia Pacific Pte Ltd., who warned of a risk of a pullback in the short term.

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