Investing.com | Sep 12, 2019 03:24
By Barani Krishnan
Investing.com - Gold caught a break on Wednesday from a four-day rout. Buyers flocked back to the yellow metal on expectations that the European Central Bank would cut rates and that the U.S. Federal Reserve would follow through on that action.
U.S. gold futures returned above the key $1,500 level. Futures December delivery settled up $4, or 0.3% at $1,503.20 per ounce on the Comex division of the New York Mercantile Exchange. On Tuesday, December contract hit a near one-month low of 1,494.45.
Spot gold, reflective of trades in bullion, remained under $1,500, although it bounced up $11.73, or 0.8%, to $1,497.06. On Tuesday, bullion sank to an Aug. 13 low of $1,486.59.
Gold got a bid as traders awaited the outcome of the ECB policy meeting on Thursday.
The ECB is widely expected to rejoin the global trend of monetary policy easing. But traders have also pared their bets on this in recent days after several top ECB officials voiced concern about resuming large-scale bond purchases. Others have fretted that an aggressive move now would tie the hands of incoming President Christine Lagarde.
Lagarde is due to succeed Mario Draghi as president in November.
The ECB’s meeting will be a warm-up to the Federal Reserve’s own policy meeting next week, where traders expect another 25 basis point cut to the target range for Fed funds. Fresh pressure from President Donald Trump, who tweeted earlier Wednesday that “boneheads” at the Fed should cut to “ZERO, or below”, had little impact on prices.
“Recent moves in risk markets have seen traders pare back their expectations of Fed rate cuts, which suggests that any additional downside from here should be temporary and represent a buying opportunity (in gold) given the underlying economic weakness and dovish central bank tilt still remains,” TD Securities said in a note.
Last week, it had been the turn of both China and Russia to ease monetary policy, the latter cutting its key rate to a five-year low of 7.00%, and the former cutting reserve requirements for banks.
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.
More content, faster quotes and charts, and a smoother experience is available only on the App.