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Metals Soar on Dovish Fed, Gold Touches 5-Year High

Summary:
Precious metals jumped today, with gold for immediate delivery rising to the highest level in more than 5 years. Even copper, which failed to log gains yesterday, managed to join the rally today. The reason for the rally was the same as for yesterday’s gains — the unexpectedly strong dovish stance of the Federal Reserve. While the Fed did not change its monetary policy yesterday, it signaled that interest rate cuts are possible later this year. Precious metals, and gold especially, tend to suffer from higher borrowing costs as they reduce attractiveness of non-yielding assets. Consequently, lower rates make bullion more appealing to investors. Additionally, more accommodative monetary policy weakens the US dollar, bolstering commodities priced in the greenback. August futures for delivery

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Precious metals jumped today, with gold for immediate delivery rising to the highest level in more than 5 years. Even copper, which failed to log gains yesterday, managed to join the rally today. The reason for the rally was the same as for yesterday’s gains — the unexpectedly strong dovish stance of the Federal Reserve.

While the Fed did not change its monetary policy yesterday, it signaled that interest rate cuts are possible later this year. Precious metals, and gold especially, tend to suffer from higher borrowing costs as they reduce attractiveness of non-yielding assets. Consequently, lower rates make bullion more appealing to investors. Additionally, more accommodative monetary policy weakens the US dollar, bolstering commodities priced in the greenback.

August futures for delivery of gold jumped 2.68% to $1,384.90 per troy ounce as of 9:58 GMT on COMEX today, climbing 2.8% to $1,386.30 per ounce earlier — the highest level for a most actively-traded contract since April 2018. Spot price for bullion rallied 1.61% to $1,382.30 per ounce after rising as much 2.5% to $1,394.11 per ounce — the highest since September 2013. Silver for delivery in July surged 2.89% to $15.39 per ounce. Spot price for platinum advanced 0.93% to $819.78 per ounce, and palladium gained 1.34% to $1,524.38 per ounce. September copper rose 1.29% to $2.7150 per pound.


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Vladimir Vyun
Vladimir is an online journalist with background in computer science and work experience in pension funds. He contributes news reports, fundamental analysis and sentiment forecasts to TopForexNews.com and CommodityBlog.com. His main specialization is the currencies of emerging economies and inter-market correlations with commodity and bond trading.

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