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INTL FCStone: Fed Meeting Prompts 'Thunderous Rally In Gold'

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Gold soared as the dollar sagged following a dovish outcome of a Federal Open Market Committee meeting on Wednesday, said INTL FCStone. Fed members suggested rate cuts may be coming due to rising “uncertainties” about the economic outlook, a turn from in the past when policymakers said they would be “patient.” The U.S. dollar came under pressure as a result, INTL FCStone said. This in turn prompted a “thunderous rally in gold,” INTL FCStone continued. As of 8:09 a.m. EDT, Comex August gold was $36.20 higher at $1,380.80 an ounce.

By Allen Sykora of Kitco News; asykora@kitco.com

 

SP Angel: Gold Boosted By U.S. Rate-Cut Prospects

Thursday June 20, 2019 08:25

Gold prices have hit their highest level in more than five years as the U.S. Federal Reserve indicated a readiness to cut interest rates, SP Angel said. “The dovish tones stood out as the Fed left its key rate unchanged on Wednesday and dropped a reference to being ‘patient’ on borrowing costs while forecasting a larger miss of their 2% inflation target this year,” SP Angel said. Analysts noted that the shift followed the European Central Bank’s dovish stance this week, as well as attacks on the Fed by U.S. President Donald Trump for not doing more to bolster the economy. “Historical easing cycles and stimulus measures have proven to be a boon for gold, with the non-interest-bearing safe-haven metal rising almost 20% when the rates fell from 2007 to 2008,” SP Angel said.

By Allen Sykora of Kitco News; asykora@kitco.com

 

BBH: Dollar Under Pressure After FOMC Decision

Thursday June 20, 2019 08:25

The U.S. dollar is under pressure after the Federal Open Market Committee delivered a “dovish hold” on Wednesday, said Brown Brothers Harriman. There was no change in interest rates, as expected. “What was unexpected was that eight FOMC members now see rate cuts this year as appropriate versus none in March,” BBH said. A major change in the language of the Fed’s policy statement was dropping reference to a “patient” approach on interest rates. Instead, the Fed pledged to “act as appropriate to sustain the expansion.”  Implied yields for the Federal fund futures have fallen. “The January 2020 contract is now at 1.60%, which is fully pricing in three cuts this year,” BBH said. “The January 2021 contract is now at 1.26%, which is fully pricing in one cut next year and part of a second….The dollar held up right after the decision, but weakness has picked up in today’s trading.” As of 7:57 a.m. EDT, the September U.S. dollar index was down 0.427 point to 96.155.

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