Gold Reacts Sharply to FED’s Interest Rate Cut
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02 August 2019
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Gold Reacts Sharply to FED’s Interest Rate Cut
The Federal Reserve has announced a widely anticipated 0.25% interest rate cut, reducing the rate from 2.50% to 2.25%. While rate cuts traditionally boost gold prices as investors seek safe-haven assets during periods of reduced savings incentives, the initial reaction was contrary.
Gold prices dropped $4.00 per ounce ahead of the announcement and saw further declines from $1430.00 to $1415.00, breaking out of the previous consolidation zone. The downward momentum was strong, signaling more room for potential declines. However, gold has since stabilized, trading within a consolidation range, and a reversal remains possible.
In a dramatic turn, President Trump’s tweet about imposing a 10% tariff on Chinese imports reignited demand for gold, pushing prices upward. The metal surged past key resistance levels, with momentum suggesting a possible climb toward the $1446.20 mark. Despite the upward trend, resistance near this level could limit further gains.
Gold’s volatile movements highlight the influence of macroeconomic decisions and geopolitical tensions, making it a key asset to watch in the current market climate.
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