Gold rises to 6-year high as bulls ‘back in control’
The Fed historically likes to kick on an easing cycle with a bang
Two key data points on Friday suggest speculators are adding plenty of cash to the rally, which could drive prices even higher. Gold has now surpassed $1,400 an ounce, reaching an almost six-year high.
“Gold bulls are back in control,” Edward Moya, senior market analyst at Oanda Corp, said in a note, adding the metal remains supported by rising expectations of a 50 basis point cut at the Fed’s July meeting.
“The question is no longer will the Fed ease, but by how much? The Fed historically likes to kick on an easing cycle with a bang and a 50 basis point cut should become the base case.”
The rally has been driven by signs that the Federal Reserve and other central banks are turning more dovish on monetary policy. Planned US sanctions against Iran, as well as the coming meeting between the American and Chinese presidents, is also creating a raft of bullish factors for the precious metal.
Gold could end the year even higher, according to Russ Koesterich, a portfolio manager at the $27 billion BlackRock Global Allocation Fund. Spot gold climbed 0.6% to $1,407.76 at 12:04 pm in London. Prices soared 4.3% last week, the biggest gain since April 2016.