· Gold prices surged to a near six-year peak overnight after the US Federal Reserve bank signalled it was ready to cut interest rates as early as next month to boost growth, triggering a sharp fall in the US dollar.
· Spot gold jumped 2.2 per cent to $US1,390.38 per ounce. Prices touched $US1,392.84 - their highest since early September 2013.
· US gold futures settled 3.6 per cent higher at $US1,396.90 per ounce.
· "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," said Saxo Bank commodity strategist Ole Hansen said.
The U.S. Federal Reserve on Wednesday signalled 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. Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
The Fed's rate signal came before meetings at other major central banks in Asia and Europe that were expected to flag similar moves. The European Central Bank and the Australian central bank had signalled this week more policy stimulus was needed.
"The main reason why we are seeing interest rate expectations being reduced so dramatically is 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.
· Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the US dollar, making gold cheaper for investors holding other currencies.
· The Fed on Wednesday signalled 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.
· Top Chinese and US officials will resume trade talks in accordance with the wishes of their leaders, after negotiations to reach a broad trade deal broke down last month.
· "Gold has been supported of late by trade and growth uncertainties, which weakened the US dollar, caused bonds to rally and spurred equity market volatility," UBS analysts said in a note.
"The Fed's dovish pivot on interest rates has pushed the gold price to a 5-year high and toward the $US1,400/oz mark."
· The US dollar fell 0.5 per cent against a basket of its rivals to 96.64, putting it on course for its biggest two-day drop since February 2018. Gold in Australian dollars was at an all-time high.
· "We believe the bullish market mood points to a short-term consolidation but still see the longer-term recovery on track. Later this year, gold should benefit from a weakening US dollar, followed by returning safe-haven demand next year," Julius Baer analyst Carsten Menke said in a research note.
· Silver was up two per cent to $US15.46 per ounce, its highest in over 12 weeks.
· Platinum dropped to $US808.00 per ounce and palladium declined 0.8 per cent to $US1,488.50.
Reference: CNBC
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