August 15, 2022

Gold extends gains on surprise Fed rate cut

By Administrator_India

Capital Sands

Gold prices rose on Wednesday, after surging more than 3% in the previous session as the U.S. Federal Reserve cut interest rates to help soften the economic blow from the coronavirus outbreak.

Spot gold climbed 0.3% to $1,644.97 an ounce, having registered its biggest one-day percentage gain since 2016 in the previous session.

U.S. gold futures gained 0.2% to $1,646.80.

The Fed cut interest rates on Tuesday in an emergency move to safeguard the world’s largest economy from the impact of the coronavirus epidemic.

However, the decision failed to calm investor nerves, with all three major U.S. stock indexes closing nearly 3% lower overnight, while Asian shares wobbled on Wednesday.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion while weighing on Treasury yields and the dollar.

U.S. benchmark 10-year Treasury yields hovered close to record lows touched in the previous session, when they slid below 1% for the first time.

The Hong Kong Monetary Authority lowered its base rate charged through the overnight discount window by 50 basis points.

G7 finance ministers and central bank governors said on Tuesday they would use all appropriate policy tools to achieve strong, sustainable growth and safeguard against risks from the virus, which has fuelled global recession fears.

The World Health Organization warned of a global shortage and price gouging for protective equipment to fight the epidemic and asked companies and governments to increase production by 40% as the death toll mounted.

Demand for platinum from the auto industry will rise this year for the first time since 2016 but it won’t be enough to offset a decline in investment buying, leaving the global market in surplus again, the World Platinum Investment Council said.

Palladium slipped 0.4% to $2,490.62 per ounce, while platinum was up 0.1% at $875.62.

Silver rose 0.3% to $17.22 an ounce.

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