Gold traded lower early on Thursday, as investor mood was buoyed by the dovish stance of the Federal Reserve. On Wednesday, the Fed committed to leave interest rates near zero and pledged to use all its tools to support an economic recovery. Members of the Fed’s policy-setting committee voted unanimously to keep the target range for short-term interest rates at between 0% and 0.25%.
At a news conference on Wednesday, Fed chair Jerome Powell said: “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check.” He added; “there’s probably going to be a long tail where a large number of people are struggling to get back to work.” He made it clear that the Fed is “not even thinking about thinking about thinking about” raising rates.
On Wednesday, the United States passed the grim milestone of 150,000 coronavirus deaths, making it the hardest hit country in the world by a wide margin. Earlier in the week, World Health Organization director general Tedros Adhanom Ghebreyesus said the new coronavirus pandemic is easily the worst global health emergency the agency has faced.
Meanwhile, silver has also soared and has a year to date percentage increase of 36%, beating gold’s 29% gain. July marks silver’s largest monthly rally since 1980. Supply disruptions in Latin America played a role in the recent price spike, with the closure of Peruvian and Mexican mines due to the pandemic.
Looking at the gold daily chart we can see the uptrend that began on March 20th and the recent sharp surge upwards from July 21st. The yellow metal hit a fresh record high on Wednesday, bringing the major psychological level of $2,000 into close view for the bulls.