Bengaluru — Gold prices surged as much as 1.8% to their highest in more than five years on Thursday after the US Federal Reserve signalled possible interest rate cuts later in 2019, sending the dollar and US Treasury yields lower.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies. “With this move, the target for gold investors has moved to $1,400 and the key is to sustain this momentum for this week. On the longer term, it is going to be difficult to stay above $1,400 as with better conditions for riskier assets due to rate cuts, investors might move to equities.”Even as the US central bank left its benchmark interest rate unchanged for now, the shift in sentiment since its last policy meeting weighed on the dollar and US Treasury yields.
“The question now is if there is going to be a 50 basis point cut in July, which could take gold into $1,400.”for the first time, hitting a record high of A$2,005.23.
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