• Gold surges $362/oz to $3318/oz record high after traders pare bullish bets

• Gold's dramatic rise suggests growing will to seek safety

• Gold up $705/oz this year and has more than doubled since Oct 2022

• FX traders have opted to buy euro, swissy and yen and sell dollars

• Traders are gambling that current risk aversion does not develop into crisis

• Bets against dollar will exacerbate FX reaction should risk aversion rise

• There is potential for a short squeeze before a rush for liquidity

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gold

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)