Gold Climbs After Fed Cuts Interest Rates as Virus Spreads
Gold jumped after the Federal Reserve cut its benchmark interest rate by a full percentage point to near zero, sending U.S. equity futures tumbling and pointing to another volatile week ahead for markets.
Bullion rose 3% on Monday morning, following its worst week since 1983, as the U.S. central bankmoved to cushion the U.S. economy from the fallout of the coronavirus. Prices had been hammered by a rush to raise cash to cover losses in other markets, while a stronger dollar also curbed the metal’s appeal.
The Fed announced several other actions, including letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero percent. Wild swings across markets have become an almost daily occurrence as investors assess the efficacy of actions by authorities to contain the virus pandemic. U.S. equity futures dropped about 5%, hitting limits on trading, after stocks climbed more than 9% on Friday.
Lower rates typically boost the appeal of gold, which doesn’t offer interest. Fed Chairman Jerome Powell said policy makers must do what they can and economic growth is likely to be weak in the second quarter.New Zealand’s central bank also cut interest rates in an emergency move.
Gold rose more than $45 an ounce to $1,575.47 and was at $1,545.74 by 6:54 a.m. in Singapore. Silver climbed almost 3%, while palladium tumbled more than 5% and platinum fell 2%.
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