Gold hits five-year high on dovish Fed
Gold prices hit a five-year high today after dovish signals from the US Federal Reserve put pressure on the dollar.
Spot gold hit $1,380.96 per ounce, its highest peak since March 2014.
Read more: Gold, the Federal Reserve, and the dollar – what’s driving up precious metal prices?
It follows a a rise of around $80 in June alone.
Today’s rise came as the Fed signalled it could cut interest rates potentially as early as next month.
“The driver for the surge is obviously the Fed delivering the dovish tilt that the market was looking for. It removed the ‘patience’ approach to cutting rates,” said Saxo Bank commodity strategist Ole Hansen.
Ned Naylor-Leyland, who manages the Merian Gold and Silver Fund, gold investors have been predicting this for some time.
“The past seven years of hawkish promises about higher rates and central bank balance sheet unwinding was, as gold investors warned, a blip in the trend of monetary policy that is loose, looser and looser still,” he said.
“As the cash and bond market becomes nervous about the future purchasing power of US dollars, gold and silver prices look set to resume their secular bull run.”
Meanwhile, international events are also driving up the metal’s price, the Royal Mint said.
Read more: Gold rises to eight-month high as Huawei tensions weigh on dollar
“It is clear investors are seeking the safe haven qualities of gold amid heightened geopolitical tensions,” said its director of precious metals, Chris Howard.
“By increasing their exposure to gold and other precious metals, they have the opportunity to offset the risks of market volatility.”