SEATTLE (Scrap Monster):Gold retreated after surging above $2,200 an ounce for the first time on conviction that the Federal Reserve will cut interest rates this year.
The precious metal rose as much as 1.6% to a record $2,220.89 in early trading before erasing gains to drop as much as 0.9%. Gold has rallied nearly 10% since mid-February as the outlook for looser US monetary policy triggered fresh investor bets on bullion.
While the speed of gold’s rally caught some market watchers off guard, the Fed appeared to reaffirm those bullish expectations on Wednesday. The central bank maintained its outlook for three rate cuts this year, suggesting it isn’t alarmed by a recent uptick in inflation.
“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. Fed officials have said “they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment.”
Gold’s gains over the past five weeks have also been underpinned by long-standing supports including heightened geopolitical risks and buying by central banks, led by China. Chinese consumers have also been stocking up, purchasing gold coins, gold bars and jewelry as a way to safeguard their wealth from a property downturn and losses in the country’s stock market.
“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. Fed officials have said “they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment.”
Gold’s gains over the past five weeks have also been underpinned by long-standing supports including heightened geopolitical risks and buying by central banks, led by China. Chinese consumers have also been stocking up, purchasing gold coins, gold bars and jewelry as a way to safeguard their wealth from a property downturn and losses in the country’s stock market.
Courtesy: www.finance.yahoo.com
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