Gold Price Hits 7-Year High as Fed Scrambles to Curb Rate-Cut Mania
Gold Price Hits 7-Year High as Fed Scrambles to Curb Rate-Cut Mania Author: Sam Bourgi for CCN
Gold is outshining other financial assets on Thursday. The yellow metal rose for a sixth consecutive day en route to fresh seven-year highs.
- Gold surged 0.9% to $1,626.50/oz., a new seven-year high.
- Federal Reserve Board members are pouring cold water on expectations of gradual rate cuts this year.
- Stocks suffer a major setback over coronavirus, overvaluation fears.
Gold charted a fresh seven-year high Thursday after the Federal Reserve’s top brass tried to temper the market’s expectation of another rate cut this year.
As CCN reported earlier in the week, traders aren’t buying the Fed’s narrative on monetary policy amid signs the global economy was headed for a soft landing.
Gold Extends Rally
Gold for April delivery surged $14.70, or 0.9%, to $1,626.50 a troy ounce on the Comex division of the New York Mercantile Exchange. That’s the highest since 2013.
The yellow metal has rallied for six straight sessions, adding 3.2% over that stretch. Year-to-date, bullion is up 6.4%.
Silver rose moderately in New York trading, gaining 0.1% to $18.33 a troy ounce. The grey metal was up by as much as 0.7% earlier in the session.
A surging U.S. dollar has failed to interrupt gold’s rally this week. The greenback is currently trading at nearly three-year highs against a basket of competitor currencies.
Risk-Off Sentiment Dominates
Faced with a slowing global economy, the rapid spread of coronavirus and record central-bank accommodation, investors have diverted more of their funds into gold.
On Thursday, risk-off sentiment was evident by the sudden decline in stock prices as the Dow Jones Industrial Average sold off more than 400 points. Perhaps paradoxically, gold was rallying even when stocks were at record highs, a clear sign investors were hedging their bets.