By Alex Ho
Investing.com - Gold prices rose Monday morning in Asia after as the U.S. Federal Reserve slashed interest rates and announced a $700 billion bonds buyback program over the weekend.
Gold Futures were up 1.81% to $1,544.2 by 11:01 PM ET (3:01 GMT) on Monday, up from a $1,516.7 close on Friday.
The Fed’s announcement of an interest rate cut to 0%-0.25% and a US$700 billion bond buyback program was on top of last Friday’s $1.75 trillion injection Friday. The U.S. central bank will buy back $500 billion worth of Treasuries and $200 billion of agency-backed mortgage securities, starting with a $40 billion purchase on Monday.
Several central banks have followed the Fed’s lead with The Bank of Canada, the Bank of England and the Bank of Japan all cutting cut rates in the same week.
“We will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals.” said Fed Chairman Jerome Powell.
“We’re going to be watching, and willing to be patient, certainly,” he added, while also stating his opposition to negative interest rates.
“Gold is slowly getting its groove back.” Oanda senior market analyst Edward Moya said in a note. He predicts that “Prices will ultimately benefit from all this global monetary and fiscal stimulus. Gold should grind its way back above $1,600 an ounce after we see all the other central banks ramp up their efforts this week.”