Gold Soared on Trade Concerns and Rate Cut Bets
July 12, 2019 | Friday
Gold prices climb on Friday, which resulted in a track to its weekly gain, firming to more than $1,400. And at the same time, the trade tension of Sino-U.S. is once again escalating amid global growth worries, and the anticipation of an interest rate cut by the Federal Reserve stirred the demand for safe-haven assets.
In addition to that, the spot price of gold rose 0.6% at $1,411.67 an ounce. For this week, the precious metal was up to almost 0.9%.
Chief Market Strategist Michael McCarthy stated, "A slightly weaker U.S. dollar, tensions in the Middle East, and once again, prolonged trade dispute between the U.S. and China, which are all supportive."
Then, on Thursday, Fed Chair Jerome Powell pointed out that a rate cut might happen during the next meeting of the Fed. The chopping of interest rate was due to the ongoing trade wars and global growth slowdown.
On the other hand, According to U.S. President Donald Trump, China reneges from its previous promises, the country made on purchasing agricultural products from American farmers. As a result, the trade dispute damaged global markets and infuriated economic jitters. Also, the weak economic data from Singapore became the latest indicator of the trend.
And gold is traditionally a safe investment every time there are political and financial difficulties.
Cause of Gold Price Boosts
Meanwhile, the slightly weaker dollar is also pushing gold's status. And it is making the yellow metal more affordable for investors with other currencies. The U.S. unit is currently nearing towards a weekly decline following the surge of more than 1% the previous week.
But the dollar somehow recovered after the Thursday's data showed a pick-up in underlying inflation in the U.S. And this diminished anticipations for an aggressive 50 basis point cut at the Fed's meeting on July 30 and 31.
Above all, lowering the interest rate will bolster gold as it can lessen the opportunity cost of holding non-yielding bullion.
Loving what you've read now and want to have more news similar to this? Send your contact details here. Need to advertise your business? Connect with us now, and we'll be glad to help.