Spontaneous US key rate cut blows up Gold price

Gold price jumps up

It can be that fast. The US Federal Reserve is not making prisoners in the fight against the coronavirus crisis. This afternoon, it lowered the US base rate by 50 basis points to 1.00 to 1.25 percent. The gold price jumped up spontaneously. At 5 p.m., the troy ounce of gold on the spot market cost $ 1,632 (+ 2.9%). This corresponded to 1,461 euros (+2.4%). Silver climbed 3.5 percent to $ 17.29 ($ 15.45; + 2.8%.).

 

Interest rate cut due to Covid-19

A short statement from the Fed said: “The fundamentals of the US economy remain strong. However, the corona virus poses new risks for economic activity. Given these risks and to help achieve the maximum employment and price stability targets, the Fed’s Open Market Committee today decided to cut the target range for the Federal Funds Rate by half a percentage point to 1 to 1-1 / 4 percent. The Committee is closely monitoring developments and their impact on the economic outlook, and will use its tools and act as needed to support the economy. ”

 

Little effect on stocks

While precious metal prices rose sharply, the impact of the surprise campaign on the stock markets remained subdued. The DAX had only followed the sharp rise in the US price in the morning. On Monday, the Dow Jones index achieved the largest daily profit in history with a plus of 5 percent or +1,293 points. The stock indices then even released some of their short-term gains in the afternoon. At 5:15 p.m., the DAX was still up 1.5 percent with 12,030 points.