Gold hit a record high on Monday as growing optimism that the Federal Reserve will cut US interest rates in the new year has dented the dollar in recent weeks.

The precious metal, seen as a safe haven investment, reached an all-time pinnacle at $2,135.39 an ounce.

Profit-taking later set in, leaving it to trade at $2,043.80.

The dollar was also firmer on Monday.

Gold is benefitting from the Israel-Hamas war, according to analysts.

"Concerns about the shaky global economic backdrop and the Israel-Hamas conflict have fuelled investor demand for safe haven assets like gold," said Victoria Scholar, head of investment at Interactive Investor.

"Plus, expectations for Fed rate cuts next year have put downward pressure on the US dollar, which is trading around three-month lows, adding to gold's attractiveness."

Elsewhere, bitcoin traded above $40,000 for the first time since May last year, boosted by hopes that the United States would soon allow broader trading of the world's biggest cryptocurrency.

Major stock markets mostly fell.

Traders are shrugging off Fed boss Jerome Powell's attempts to temper expectations of US rate cuts in the first quarter of 2024.

Bets on an easing of monetary policy were ramped up when Powell on Friday said that it was "well into restrictive territory" after more than a year of hikes that have put borrowing costs at a two-decade high.

Central banks around the globe have sent interest rates soaring, helping to bring down surging inflation.

Bloomberg reported that traders expect a 60 percent chance of a US rate cut, while they have fully priced in one by May. 

"Markets are piling in on the rate cut bets," said Kyle Rodda at Capital.com.

He added that recession risks added to gold's appeal.

Bitcoin reached a 19-month high on hopes that firms including BlackRock would be given US approval to sell the first spot bitcoin exchange-traded funds.

"We still don't quite know when it will (happen) but there's a strong belief it will and soon," said Craig Erlam at the trading platform OANDA.

Bloomberg said a batch of the products are thought to be given the go-ahead by the Securities and Exchange Commission by next month.

In equities trading, troubled developer China Evergrande briefly surged more than 13 percent in Hong Kong after a court in the city allowed extra time to form a restructuring plan aimed at avoiding liquidation.

The firm, which defaulted on a debt repayment in 2021 and has reported more than $300 billion in liabilities, was hit with a winding-up petition and faces liquidation if officials decide its proposal is not sufficient.

Oil prices stabilised after having fallen following a deal last week by OPEC members and their allies to further cut production.

"Crude oil prices have remained under pressure on concerns over slowing demand, as well as some scepticism that the OPEC+ mandated cuts of an extra one million barrels a day will hold, and the fact that US production continued to break new records," said Michael Hewson, chief markets analyst at CMC Markets UK. 

Key figures around 1630 GMT

New York – Dow: DOWN 0.4 percent at 36,090.16 points

London – FTSE 100: DOWN 0.2 percent at 7,512.96 (close)

Paris – CAC 40: DOWN 0.2 percent at 7,332.59 (close)

Frankfurt – DAX: UP less than 0.1 percent at 16,404.76 (close)

EURO STOXX 50: DOWN less than 0.1 percent at 4,414.95 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 33,231.27 (close)

Hong Kong – Hang Seng Index: DOWN 1.1 percent at 16,646.05 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,022.91 (close)

Euro/dollar: DOWN at $1.0821 from $1.0883 on Friday

Pound/dollar: DOWN at $1.2624 from $1.2708

Dollar/yen: UP at 147.10 yen from 146.84 yen 

Euro/pound: UP at 85.71 pence from 85.60 pence

West Texas Intermediate: DOWN less than 0.1 percent at $74.03 per barrel 

Brent North Sea crude: UP 0.1 percent at $78.97 per barrel