Gold extends four-day winning run, hits new 7.5-year high


  • Gold jumps to the highest level since November 2012. 
  • Fed's Powell again rules out negative rates but says more stimulus may be required.
  • Renewed US-China tensions may be drawing bids for the yellow metal. 

Gold jumped to a fresh 7.5-year high on Monday even though Federal Reserve's President Jerome Powell ruled out negative rates and stock futures gained altitude. 

The yellow metal rose to $1,760 per ounce during the Asian trading hours to hit the highest level since November 2012, having eked out gains in each of the preceding four trading days.  

Powell rules out negative rates

The central bank remains averse to using negative interest rates to respond to the economic impact of the coronavirus pandemic, Federal Reserve's President Jerome Powell told CBS during a 60-minute interview held over the weekend. 

Even so, gold, a zero-yielding safe-haven metal, rose to multi-month highs, possibly due to renewed friction between the US and China over the coronavirus outbreak. The Trump administration stepped up its anti-China rhetoric over the weekend, with a top aide suggesting Beijing sent airline passengers to spread the infection worldwide.

Also, Powell told CBS that both the central bank and Congress would have to do more to help the economy absorb the shock arising from the virus outbreak. 

Markets began pricing negative rates earlier this month with President Trump calling them a "gift" enjoyed by other nations. Powell, however, dashed hopes for negative rates on Wednesday. Bank of England Governor Andrew Bailey and Bank of Japan Governor Haruhiko Kuroda on Thursday suggested that their focus is on bond purchases and other lending programs to keep borrowing costs low.

However, looking at the rally in gold, it appears as though investors are convinced that the Fed and other major central banks would eventually cut rates to the negative territory. The Reserve Bank of New Zealand opened the doors to sub-zero rates last week. The European Central Bank, the Swiss National Bank, and the Bank of Japan are already running a negative interest rate policy. 

At press time, gold is trading at $1,756 per ounce, representing at 0.90% gain on the day. Meanwhile, the dollar index, which tracks the value of the greenback (gold's biggest nemesis) against majors, is sidelined near 100.34. 

Technical levels

    1. R3 1776.25
    2. R2 1764.03
    3. R1 1753.12
  1. PP 1740.9
    1. S1 1729.99
    2. S2 1717.77
    3. S3 1706.86

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits three-week highs after the Fed, dismal US growth figures

EUR/USD approaches 1.1900, hitting the highest in three weeks. The dollar is falling across the board after the Fed refrained from pre-announcing tapering and sees inflation as transitory. German CPI beat estimates with 3.8% YoY in July. US GDP misses expectations.

EUR/USD News

GBP/USD soars above 1.3950 on Fed dovishness, Brexit optimism

GBP/USD is trading above 1.40, extending its gains after the Fed seemed reluctant to taper bond buys. The EU's suspension of legal action over the NI protocol supports sterling. UK scraps quarantine rules for fully vaccinated EU, US travelers.

GBP/USD News

XAU/USD climbs to two-week tops, beyond 200-DMA post-US GDP

Gold built on the previous day's post-FOMC rebound from the vicinity of the $1,790 horizontal support and gained strong follow-through traction on Thursday. 

Gold News

SPY up, GDP down, China goes green, FB goes red, RobinHOOD launches

China stocks went green for the day on Wednesday and no it wasn't St. Patrick's day but perhaps a dead cat bounce? The Fed certainly helped the green shoots as it continued its doveish stance saying there was no sign yet of dialing back ultra-loose policy.

Read more

XRP in a league of its own as BTC and ETH  pull back

Bitcoin price is setting the stage for a pullback after a 40% upswing. Ethereum price is following BTC but might undergo consolidation. Ripple price defies its run-up, suggesting a minor correction might be enough before another rally begins.

Read more

Forex MAJORS

Cryptocurrencies

Signatures