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Gold prices benefit from decreasing interest rates.Jul 16, 2019 11:50
For the week, both bullion and Gold futures prices remain about 1% off highs hit earlier in the week on the back of Fed Chair Powell's congressional testimony.
Gold prices moved forcefully into $1,400 territory on Wednesday after Powell’s remarks on business and economic conditions in his testimony to Congress raised gold bulls’ conviction that a rate cut of at least 25 basis points was almost a certainty at the forthcoming July 30-31 Fed meeting.
Investors have rushed into gold over the past two months, pushing the yellow metal from $1,200 levels to $1,400, as talk of a rate cut that will weaken the dollar and boost gold came into play. The Dollar Index, which pits gold against a basket of currencies, has surprisingly yielded little since Powell began his dovish trip+, hitting just one-week lows.
Gold prices, which benefit from decreasing interest rates that lower the opportunity cost of holding non-yielding bullion have seen a bumpy ride this week as Powell’s apparent commitment to policy easing sent the precious metal soaring 1.15 percent.
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