Gold Prices Hit Five-Year Peak, Boosted by U.S. Fed Rate Cut Hopes

SEATTLE (Scrap Monster): The domestic gold prices in India surged to fresh highs, surpassing the INR 34,000 mark for 10 grams. The spike in prices was on account of strong rally in global gold prices coupled with robust buying by domestic jewelers. The domestic gold prices rose by INR 280 to touch INR 34,020 per ten grams.

The global gold price rose close to $1,400 per Oz, thus hitting the highest level in five years, following hints of possible rate cuts later this year by the U.S. Federal Reserve. There are expectations that major central banks are likely to ease policy. Incidentally, the weakness in U.S. dollar continued, whereas the 10-year U.S. yields dropped below 2% for the first time in almost three years.

The increased central bank gold purchases have contributed to gold price rally. The recent report published by the World Gold Council (WGC) suggests that central banks of various countries including China, India, Kazakhstan, Russia, Poland and Hungary added to their gold reserves during the past few months.

The recent forecasts of weaker global economic growth and escalating trade war tensions also elevated investor interest in gold. The weak economic data out of the U.S. and China, along with geopolitical tensions including Brexit has lifted the precious metal’s safe haven appeal. With these uncertainties likely to remain or aggravate, the gold prices are likely to see further rally over the forthcoming quarters.