Gold on Fire After Fed's Rate Cut Decision Heightens Risk-off Sentiment in Global Markets

Gold on Fire After Fed’s Rate Cut Decision Heightens Risk-off Sentiment in Global Markets

Posted Wednesday, March 4, 2020 by
Arslan Butt • 1 min read

Gold prices continue to trade bullish after rising by more than 3% in the previous session after the US Federal Reserve delivered a surprising rate cut by 50bp in the wake of the global coronavirus outbreak. At the time of writing, GOLD is trading at a little above $1,642.

The Fed’s extremely dovish move offered strong support to the safe haven appeal of gold, even as it served to weaken the US dollar, giving the precious metal an additional boost. On Tuesday, the Fed announced the rate cut to offset any possible impact on the US economy from the rapidly spreading coronavirus.

In addition to the Fed decision, G7 finance ministers and central bank officials have also pledged to take necessary steps to mitigate economic risks from the outbreak, raising the risks of a possible recession in the global economy. The risk-off sentiment in the markets has driven global equities lower while safe haven instruments remain in favor, supporting gold prices.

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