- Dovish shift in major central banks' policy outlook boosts demand for gold.
- US Dollar Index drops to fresh 2-week lows on Thursday.
- Stock market rally keeps precious metal's gains limited for now.
With major central banks adopting a more cautious tone with regards to the economic outlook and hinting at rate cuts this week, gold became an investor favourite and the troy ounce of the precious metal rose more than $50 since the start of the week to touch its highest level since September 2013 at $1393.27. Following that impressive rally, the XAU/USD pair has gone into a consolidation phase and was last seen trading near $1383, still adding more than $20 on a daily basis.
Earlier this week, European Central Bank President Draghi opened the door for rate cuts while speaking at the bank's event in Portugal. Yesterday, the FOMC dropped the term "patient" from its policy statement with regards to future policy adjustments and gave a reason for markets to believe that a rate cut will happen as early as July. The greenback came under heavy selling pressure and dragged the US Dollar Index to its lowest level in two weeks.
During the Asian session on Thursday, Bank of Japan Governor Kuroda said that it was possible for them to keep the rates at current lows beyond spring of 2020. Finally, the Bank of England today in its policy statement acknowledged that downside risks to growth had increased since the last meeting in May and revised its second-quarter growth expectation down to 0% from 0.2%.
Meanwhile, stock markets capitalized on hopes of central banks injecting additional stimulus into the economy and the S&P 500 Index hit an all-time high, grabbing investors' attention and keeping gold's gains limited for the time being. At the moment, all three major indexes of Wall Street are rising around 1% on a daily basis.
Technical levels to watch for
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.
Recommended content
Editors’ Picks
AUD/USD recovers further toward 0.6800 on risk-recovery
AUD/USD extends recovery toward 0.6800 in Asian trading on Thursday, despite mixed Australian employment data. The Aussie cheers a return of risk appetite, which weighs on the post-Fed US Dollar recovery. All eyes now remain on US economic data for fresh impetus.
USD.JPY reverses sharply from 144.00, as US Dollar recovery fizzles
USD/JPY is attacking 143.00 in Thursday's Asian session, reversing sharply from 144.00. The pair pares back gains in tandem with the US Dollar, as the latter's post-Fed recovery falters due to a rebound in risk sentiment. The focus is next on the US data due later today and Friday's BoJ decision.
Gold price regains positive traction amid a modest USD pullback from one-week high
Gold price attracts some dip-buying during the Asian session on Thursday and seems to have stalled its retracement slide from the $2,600 mark, or a fresh all-time peak touched the previous day. The US dollar trims a part of its intraday gains to a one-week high, which turns out to be a key factor lending support to the commodity.
Crypto leaders and Congress blast SEC over crypto regulations
In a meeting on Wednesday, several crypto leaders and congress members debunked the Securities and Exchange Commission's harsh regulatory approach toward the crypto industry.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.