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Metals Rally as Traders Wait for Fed Rate Cut in September

September 4, 2019 at 17:00 by Vladimir Vyun

Gold and, to a lesser extent, other precious metals are considered to be safe assets, meaning that traders buy them in times of fear and uncertainty. And with the market sentiment being positive today, one could expect industrial metals, like copper, to rally and precious metals to fall. But while copper did indeed rally, gold managed to hold ground, while other precious metals even logged substantial gains.

Market analysts speculated that the reason for such surprisingly good performance of metals was the weak US dollar, hurt by the outlook for Federal Reserve’s monetary policy. The general consensus is that the Fed will cut interest rates later this month. CME FedWatch shows a 100% probability of a cut, with about a 7% likelihood of a cut by 50 basis points. New York Federal Reserve President John Williams said in his speech about monetary policy today:

Persistently low inflation, heightened uncertainty, and global cross-currents make this a particularly challenging time for monetary policy, and my laser focus is on doing the best we can to support a strong economy and achieve our 2 percent inflation goal.

Futures for delivery of gold in December were about flat at $1,556.10 per troy ounce as of 16:54 GMT on COMEX today. Silver climbed 1.21% to $19.47 per ounce. Spot price for platinum jumped 2.77% to $985.04 per ounce, while palladium rallied 1.13% to $1,560.73 per ounce.

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