Gold Rises as Fed’s Pivot Crushes Treasury Yields

© Reuters.  © Reuters. – Gold prices jumped on Thursday as the yield on the 10-year Treasury note fell to a 14e-month low after the Federal Reserve indicated it would not raise rates for the rest of the year.

Comex for April delivery had hit a three-week high after the Fed’s announcements and retraced only marginally to $1,317.35 an ounce by 9:01 ET (13:01 GMT).

Meanwhile, the yield on the benchmark note fell another 1.8 basis points to 2.52%, some 8 basis points below where it was before the Fed, and a level not seen since January 2018. The two-year yield fell to 2.40%, its lowest since January of this year.

The Fed on Wednesday, but cut its outlook for U.S. growth over the next year.

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Gold is highly sensitive to interest rates, as lower rates tend to pressure the dollar and reduce the opportunity of holding non-yielding bullion.

Meanwhile the Bank of kept rates , ignoring upbeat economic data out of caution over the U.K.’s plan to leave the European Union.

Prime Minister Theresa May is expected to ask Brussels for a Brexit deadline extension of three months later Thursday but it’s unclear if the bloc will grant her wish.

In other news, trade tensions remained after U.S. President Donald Trump said he will keep tariffs on China to ensure that it upholds trade agreements.

Officials from the two countries are expected to meet over the next few weeks, Beijing confirmed on Thursday.

Other metals were higher on the Comex, with up 1.6% to $15.562 a troy ounce. Among other precious metals, rose 1.9% to $876.00 while inched up 0.5% to $1,568.20 an ounce. futures gained 0.3% to $2.930 a pound.

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