Gold Surges On US Federal Reserve's Shock Rate Cut
Gold prices rose again on Wednesday following the US Federal Reserve's surprise emergency 50 basis-point cut on Tuesday amid the coronavirus outbreak that had spurred a surge in the price of the yellow metal.
In the US, gold prices for April contract gained $44 on Tuesday and closed at $1638.80/oz (£1,267.07)
In the UK, prices gained further on Wednesday and were at around £1,285/oz late morning, according to gold.co.uk.
“The Fed lived up to the expectations of the market because partly it had to,” market research firm CPM Group’s managing partner Jeffrey Christian told Kitco News.
The Fed implemented an emergency move by having the central bank cut interest rates prior to the next Federal Open Market Committee (FOMC) meeting which will be held on March 18. According to US commentators, it is extremely rare to implement any monetary change prior to an FOMC meeting.
The Fed stated their decision was unanimous, and this decision occurred shortly after the G-7 finance ministers and central bankers promised to use all available tools to battle the slowdown caused by the disease (corona virus).
According to a statement released by the Fed, “The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity.”