Reuters: Gold Soars to 5-year Peak as US Fed Signals Rate Cut
Article by Eileen Soreng in Reuters
Gold prices surged to their highest in more than five years on Thursday after the U.S. Federal Reserve signalled a possible interest rate cut as early as next month, pressuring U.S. Treasury yields and the dollar.
Spot gold was up 1.6% at $1,380.96 per ounce after hitting its highest since March 17, 2014 at $1,386.38. Gold prices have gained about $80 so far this month.
“The driver for the surge is obviously the Fed delivering the dovish tilt that the market was looking for. It removed the ‘patience’ approach to cutting rates,” Saxo Bank commodity strategist Ole Hansen said.
The Fed on Wednesday signaled interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.
“We are seeing interest rate expectations being reduced so dramatically because economic data is not moving up to previous strength and that has also raised questions of how much further stock markets could continue to benefit from these rate cuts,” Hansen said.
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