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General Market Commentary
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General Precious Metals
Gold price shoots higher after Federal Reserves surprises with 50-basis point cut
(Kitco News) - Gold prices have shot higher after the Federal Reserve surprised markets with a 50 basis-point cut Tuesday morning.
"In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent,” the central bank said in a statement.
This is the first time the Federal Reserve has made such a steep cut since the 2008 financial crisis.
Gold prices are up sharply in initial reaction to move. April gold futures last traded at $1,618.80 an ounce, up 1.5% on the day.
The vote for the 50 basis-point cut was unanimously passed by the committee. Ahead of the move, markets were pricing in the cut for the upcoming monetary policy meeting.
The cut came after the Federal Reserve and the U.S. Treasury Department held a conference call with their counterparts from the G7.
“Given the potential impacts of [novel coronavirus] COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks," the officials said in a joint statement following the call.