Gold gets Fed boost after Powell flags rate cut amid global risk | Fin24
 
  • Disposal?

    Sasol may be planning to sell its South African coal-mining operations.

  • National Carrier

    Fixing SAA means overcoming an 'organised crime syndicate', says ex-prosecutions boss Vusi Pikoli.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

Gold gets Fed boost after Powell flags rate cut amid global risk

Jul 11 2019 07:57
Ranjeetha Pakiam

Gold rose for a third day after the Federal Reserve indicated that it’s preparing to cut interest rates for the first time in a decade as the global economy slows.

Bullion’s trading above $1 400 an ounce again as investors took note of the Fed’s dovishness, damping doubts over monetary policy easing that arose following stronger-than-expected US payrolls data. Speaking to Congress on Wednesday, Chairperson Jerome Powell said June’s jobs report was “great news,” but not enough to tilt the balance because wages weren’t rising fast enough to trigger much inflation.

Exchange-traded funds backed by the precious metal also received a boost, with holdings rising to 2 311.3 tons as of Wednesday, the highest level since 2013.

Near a sex-year high 

Gold is trading near a six-year high on the prospects of lower rates, which boost the appeal of non-interest-bearing assets, with geopolitical and trade tensions also spurring demand. Despite a truce between the US and China, Powell stressed downside risks stemming from uncertainties over trade and slowing momentum in some economies. Minutes from the Fed’s June meeting confirmed an inclination among officials to ease policy soon.

“Although there will be a few bumps on the way given the level of skepticism in the first gold rally cycle, we think there will be an even greater rush for gold in the coming weeks and months,” Stephen Innes, managing partner at Vanguard Markets Pte, said in a note.

“So gold prices could stay on an upward path as central banks pivot to an easing stance, the U.S. dollar turns gradually weaker with a more dovish Fed and the burden of harmful yielding debt rises.”

Powell is set to continue with his testimony later Thursday, this time before the Senate Banking Committee. Also on investors’ watch lists is data on U.S. inflation scheduled for release Thursday.

Spot gold climbed as much as 0.6% to $1,427.23 an ounce, and was at $1,422.85 at 10:50 am in Singapore. Bullion hit $1,439.21 on June 25, the highest level since 2013. The Bloomberg Dollar Spot Index dropped 0.2%.

In other precious metals, spot silver rose 0.2% and platinum gained 0.1%. Palladium advanced 0.3% and is trading near an all-time high reached in March.

NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...