Gold gets close to 2019 highs on expectation of US Fed rate cut

Bengaluru — Gold rose on Thursday, drawing closer to its highest level this year on increased expectations of a US rate cut, even as some investors locked in profits from bullion’s recent rally.

Spot gold rose 0.4% to $1,335.05 an ounce as at 11.45am GMT, while US gold futures gained 0.5% to $1,340.01.

“Gold’s strength is most certainly based on the prompt change in the market outlook on how aggressively the US Fed will cut rates over the coming months,” Saxo Bank commodity strategist Ole Hansen said.

Having suspended a three-year monetary tightening campaign earlier this year, the US Federal Reserve is now widely expected to cut rates. Chair Jerome Powell said the Fed will closely monitor the economic impact of trade conflicts.

Non-yielding gold has risen about $60 an ounce in one week, climbing on Wednesday to within a few dollars of its current 2019 high, set in February, of $1,346.73. It later reversed course.

“It seems like some profit-taking has emerged since then. Also, gold has run a long way in its rally in a short span of time, so I would not be surprised to see it consolidate,” Hansen said.

Meanwhile, US President Donald Trump threatened to hit China with tariffs on “at least” another $300bn of Chinese goods, but said he thought China and Mexico wanted to make deals in their trade disputes with the US.

Source: businesslive.co.za