Gold prices have recently surged up to their highest settled price since 2013 on Thursday after the US Federal Reserve announced plans to leave key interest rates unchanged, however also changed their patient stance on monetary policy. Investors saw this as the right time and opportunity to leap into the precious metal and the price has reflected that.
Director of research at BuillionVault has said in a recent note “Central banks everywhere are preparing to cut rates and re-start, opening up a new front in the global trade war, in this race to debase, gold stands out as the only currency which policymakers cannot inflate and devalue.”

On Thursday we saw August Gold surge well over 3.5% to settle at $1,396.90 per ounce, which based on the most active contracts, is the highest finish for the precious metal since September 2013, and additionally the largest one day percentage and dollar gains since June 2016. Not only did gold see a major rally on Thursday July silver also saw a positive incline of 53.4 cents equating to 3.6% and settled at $15.492 an ounce, the highest level since March.
Gold began its climb in electronic trading on Wednesday after the Fed policy was announced, while the Fed did stand strong and held there benchmark interest rates at a moderate 2.25%, officials have said that over the course of the last two months many uncertainties have increased the outlook, gesturing towards the trade war between the US and China.

Many of the Fed officials seem to be divided in opinion when it comes to the central bank cutting interest rates this year, however the message to the market and investors was a clear one, monetary policy easing is more than likely. In economic situations like this, where we have a low interest rate climate, many investors tend to buy precious metals like gold and silver. The current yield for the US 10 year Treasury note has seen a tumble with a drop below 2%, a level that has not been seen since early 2016. A move in a situation like this can make government debt off-putting to buyers who are looking at haven assets compared against bullion, and on a global scale more than $12 trillion government debt now attracts negative yields. Over the course of the last week to day Gold has gained over 2%, as investors have bought the metal, based on the uncertainty of the import tariff dispute between the US and China, and fears that the global economy as a whole is weakening.

Harriet Greene – IEC International