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https://i-invdn-com.akamaized.net/news/LYNXNPEF410GC_M.jpgThe haven pushed higher after Chairman Jerome Powell said the Fed is committed to “do whatever we can, for as long as it takes,” speaking after policy makers held the benchmark rate near zero on Wednesday. Almost all officials forecast keeping rates near zero through 2022, and the central bank also said it will at least maintain the current rate of bond purchases.
Bullion’s advanced 14% in 2020 as virus-related lockdowns savaged growth and spurred unprecedented stimulus. The OECD forecast a slump of 6% in the global economy this year, a deeper contraction than the World Bank had predicted. Meanwhile, America’s top infectious-disease specialist warned the outbreak is far from over, after Texas, Florida and California all reported worrying trends.
“The reason that ultra-loose monetary policy is a positive for gold is that it applies downward pressure to long-term U.S. real yields,” Vivek Dhar, an analyst at Commonwealth Bank of Australia (OTC:CMWAY), said in an email. That “effectively increases the appeal of the precious metal relative to U.S.-interest earning assets.”
Futures rose as much as 1.7% to $1,749.80 an ounce on the Comex, and traded at $1,745.10 at 8:52 a.m. in Singapore. Spot gold was a little weaker after climbing 1.4% on Wednesday as Treasury yields fell along with the dollar.
Ahead of this week’s Fed meeting, Goldman Sachs Group Inc (NYSE:GS). forecast bullion would rise to $1,800 an ounce over 12 months. That’s above the peak in futures earlier this year of $1,788.80, which was the highest since 2012.
©2020 Bloomberg L.P.