Gold prices shot to levels not seen since 2013 on Thursday, as investors flocked to the metal after the U.S. Federal Reserve left key interest rates unchanged but shifted away from its “patient” stance on monetary policy.
In electronic trading, August gold GCQ19, +2.76% soared $33.50, or 2.5%, to $1,382.20 an ounce. The contract slipped $1.90 to settle at $1,348.80 an ounce. On a continuous contract basis, gold was trading at its highest level since September 2013, according to FactSet data.
Gold began climbing higher in electronic trading Wednesday after a statement that followed the gold futures’ settlement. While the Fed held benchmark interest rates steady between 2.25%-2.50%, officials said that over the last six weeks, “uncertainties” have increased about the outlook, hinting at the trade tensions between the U.S. and China.
Fed officials appeared at odds about whether the central bank will cut interest rates this year, judging from the central bank’s projections of future interest rate moves, known as the “dot plot.” Precious metals like gold tend to attract buyers in a low interest-rate climate.
The yield for the 10-year Treasury note TMUBMUSD10Y, -1.95% dropped to just under 2%, at 1.983%, a level not seen since 2016. Such a move can make government debt less attractive to buyers seeking haven assets compared against bullion.
“As long as real rates are headed lower, the pool of negative yielding bonds increases (currently $12.3t) then gold is only going one way,” said Chris Weston, head of research at Pepperstone, in a note to clients.
Gold has gained over 2% week to date, as investors have bought the metal owing to uncertainty over an import tariff dispute between China and the U.S. and fears that the global economy is weakening. On Tuesday, European Central Bank President Mario Draghi suggested that the ECB could introduce more stimulus if the eurozone economy weakens further. The Bank of England’s Monetary Policy Committee will also make a policy announcement later on Thursday.
In other metals dealings, July silver SIN19, +2.35% rose 27 cents, or 1.8% , to $15.225 an ounce, while July copper HGN19, +1.27% rose 1% to $2.709 a pound.
July platinum PLN19, +1.18% rose 0.9% to $812.70 an ounce and September palladium PAU19, +0.41% gained 0.3% to $1,496.50 an ounce.