Gold jumped to the highest in more than five years after the U.S. Federal Reserve indicated a readiness to cut interest rates and the dollar tumbled.
Gold had a lackluster start to the year but gained momentum this month as investors sought havens amid slowing global growth due to the fallout from the U.S.-China trade dispute and as central banks adopt a more dovish tone. The metal has now broken through a five-year resistance line in a dramatic surge that brought it within spitting distance of $1,400 an ounce.
While the Fed left its key rate unchanged on Wednesday, it dropped a reference to being “patient” on borrowing costs and forecast a larger miss of their 2% inflation target this year, which weighed on the greenback. Lower rates boost the appeal of non-interest-bearing assets like gold.
Bullion for immediate delivery jumped as much as 2.5% to $1,394.11 an ounce, the highest since September 2013, and traded at $1,381.23 by 9:16 a.m. in London. For chart-watchers, the metal’s 14-day relative-strength index is deep into overbought territory, at about 81.
Source : Bloomberg