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Gold jumps to record as traders increase bets on Fed rate pivot
How mistaken and tiresome is the assertion below that gold "bears no interest." Neither do government currencies, unless they are lent. Just like government currencies, gold pays interest when it is lent. So does silver.
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By Jack Wittels, Mark Burton, and Nick Bartlett
Bloomberg News
Tuesday, July 16, 2024
Gold hit a record high today as hopes for U.S. Federal Reserve rate cuts grow and some traders ramped up bets on a second Donald Trump presidency.
Spot bullion rose as high as US$2,462.54 an ounce, moving past a previous all-time peak set in late May. The rally comes as signs of slowing inflation in the U.S. fuel speculation the central bank will soon start lowering interest rates. High rates tend to be negative for gold, which bears no interest.
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Even so, the metal has still soared nearly 20% this year, supported by large purchases from central banks, strong consumer appetite in China, and demand for haven assets amid geopolitical tensions. A recent uptick in holdings by exchange-traded funds is also aiding upward momentum.
"Optimism about U.S. interest rate cuts as more economic data supports the case for a Fed pivot is supporting gold," Ewa Manthey, a commodities strategist at ING Bank NV, said today. "Gold is poised to keep its positive momentum going amid the current global geopolitical and macroeconomic landscape, while central bank demand is expected to grow." ...
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