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Gold Climbs as Bond Yields Tumble

CommoditiesMar 02, 2020 11:51AM ET
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© Reuters.

By Kim Khan

Investing.com - Gold rallied Monday as its appeal to hold rose amid a plunge in interest rates and a decline in the dollar.

Gold futures gained 1.8% to $1,595.20. Spot gold rose 0.6% to $1,594.77.

Gold, which has no yield, becomes more attractive when interest rates fall and markets are now pricing a sharp decline in borrowing costs. The 2-year Treasury yield fell to 0.814%, levels not seen since 2016.

Goldman Sachs (NYSE:GS) predicted the fed funds rate would be lower by a full point at the end of the second quarter. Fed funds futures see the Federal Reserve cutting rates down to 0.5% to 0.75% by the end of the year.

The dollar index was off 0.7% to 97.45.

Gold Climbs as Bond Yields Tumble
 

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Comments (3)
Nikolas Stark
Nikolas Stark Mar 02, 2020 12:29PM ET
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If the stock market is still having brutal downturn, the gold will also get dragged down for several weeks just like in 2008 because investors on margin call need cash to cover their loses on stock positions. But if stock markets around world are stabilized, gold will slowly but surely rally to new high.
Abdelraziq Abuaisha
Abdelraziq Abuaisha Mar 02, 2020 12:28PM ET
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If your central banks weren’t intervening in the market, we could have seen many higher levels. But at some point you won’t be able to control it, and it will sky-rocket baby :).
AIM Investor Journal
AIM Investor Journal Mar 02, 2020 12:22PM ET
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Expecting gold to retest recent highs and break through $1700 in the coming weeks. Last week was brutal but certainly not indicative of how gold should behave in the near term.
 
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