Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Gold Prices Extend 4-Day Rally on Fed Cut Expectations

Commodities Jul 30, 2019 09:53AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. - Gold prices rallied for a fourth consecutive session on Tuesday as international bond yields continued to fall in response to weak Japanese and European data, ahead of the Federal Reserve's two-day policy meeting.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, rose $9.10, or 0.6%, to $1,429.50 a troy ounce by 9:18 AM ET (13:18 GMT), having hit a five-day high of $1,430.50 earlier in the morning. They've now recouped almost all the losses suffered after last week's European Central Bank meeting.

The Fed is widely expected to move forward with a quarter-point reduction to interest rates, its first cut in a decade, when it announces its decision on Wednesday.

Non-yielding bullion, which benefits from lower rates, has been steadily climbing in the run-up to the expected announcement. With fed funds futures pricing odds of the 25 basis point cut at 100%, attention has shifted to just how much resistance the move will receive from within the Federal Open Market Committee.

“Given the sharp differences of opinion among committee members on the efficacy of a rate cut now as opposed to reserving as much monetary firepower as possible for when the current business cycle ends, there will likely be at least one dissenting voice," Joseph Brusuelas, chief economist at consultancy RSM US LLP, said in a morning note.

Market expectations for an even larger 50 basis point cut soared mid-month, but have since pulled back in light of a series of positive economic data, including a slowdown in U.S. economic growth that was not as bad as forecast. Following Wednesday’s expected cut, markets still project another reduction in September with chances for a third decrease in December above the 50% mark. analyst Darrell Delamaide said that the Fed statement and press conference with Jerome Powell will overshadow the rate cut itself.

“The market reaction this week depends a lot on how the committee phrases its consensus message and most of all on how Powell explains the thinking of policymakers,” Delamaide said.

“If he continues to emphasize headwinds and risks to the economy, especially from trade tensions, investors can maintain their belief that further cuts are in store.”

In other central bank news, the Bank of Japan made no changes to interest rates in its decision announced overnight. Although it did revise its inflation forecast lower, it refrained from extending the duration of its promise to keep rates at extremely low levels beyond spring of 2020.

European economic data also supported risk-off behavior to the benefit of the precious metal as German consumer confidence worsened for a third straight month in August and business confidence in the wider euro zone in July hit its lowest in nearly six years. German inflation also fell further and French gross domestic product growth slowed to 0.2% in the second quarter.

All of that, coupled with mounting fears of a disruptive "hard" Brexit, sent French and German bond yields back down to test their all-time lows. The German 10-year benchmark yielded -0.40% by mid-afternoon in Frankfurt, while the French counterpart yielded -0.14%.

U.S. personal income and spending for June were in line with expectations although inflation data, in the form of the core PCE price index, came out lower than expected.

The Conference Board will release its report on consumer confidence for July at 10:00 AM ET (14:00 GMT).

In other metals trading, silver futures gained 0.6% to $16.538 a troy ounce by 9:19 AM ET (13:19 GMT).

Palladium futures dropped 0.2% to $1,550.25 an ounce, while sister metal platinum rose 0.4% to $885.35.

In base metals, copper traded down 1.1% to $2.688 a pound.

Gold Prices Extend 4-Day Rally on Fed Cut Expectations

Related Articles

Oil slips as recession fears balance tight supply
Oil slips as recession fears balance tight supply By Reuters - Jul 04, 2022 10

By Alex Lawler LONDON (Reuters) - Oil edged lower on Monday as fears of a global recession that would hit demand overshadowed concerns of tight supply amid lower OPEC output,...

Gold teeters above $1,800 as dollar strength weighs
Gold teeters above $1,800 as dollar strength weighs By Reuters - Jul 04, 2022

By Bharat Gautam (Reuters) - Gold edged lower in choppy trade on Monday, pressured by a stronger U.S. dollar, but weakness in Treasury yields helped keep prices above $1,800....

Oil Down as Recession Fears Outweigh Supply Tightness
Oil Down as Recession Fears Outweigh Supply Tightness By - Jul 04, 2022 1

By Zhang Mengying – Oil was down on Monday morning in Asia as fears of an economic slowdown outweighed the supply tightness amid lower output from the Organization of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
romy polito
romy polito Aug 05, 2019 12:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
no matter how many rallies you have for gold the truth is it never never doube itself in value in TEN YEARS time !! But for Bitcoins doubling and tripling in in a monht is very common, like a dozen a dime.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email