Sept. 18, 2019 12:53 pm ET
Gold prices rose Wednesday, as investors geared up for the Federal Reserve to announce a rate cut at the end of its monetary policy meeting this afternoon. Gold for December delivery was recently up 0.2% at $1,516.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Most investors believe the Federal Reserve will reduce its short-term benchmark rate by one quarter percentage point to a range between 1.75% and 2% at the conclusion of its two-day meeting. Expectations of lower rates tend to boost gold, which struggles to compete with yield bearing assets when borrowing costs rise. Prices for the precious metal hit their highest level in six years earlier this month, amid expectations that yields in the U.S. and around the world are likely to further decline in coming months as global central banks fight slowing growth.
Meanwhile, oil prices were on track for their second straight daily decline after an attack on Saudi Arabia’s production facilities over the weekend sparked historic gains Monday on supply concerns. Signs that the kingdom could return output to normal have sparked the reversal. Brent crude, the global benchmark, was recently down 1.1% at $63.86 a barrel. U.S. oil prices were down 1.3% at $58.32 a barrel. Both logged 15% gains on Monday, the biggest one-day surge ever for Brent and the biggest gain in more than a decade for U.S. crude. Saudi Arabia on Wednesday said it holds Iran responsible for attacks that debilitated its oil facilities, directly putting the blame on Tehran for the first time but stopping short of explicitly accusing it of conducting the strikes. At the same time, data showed U.S. oil inventories rose last week, climbing 1.1 million barrels to 417.1 million. A Wall Street Journal survey showed analysts expected a 2.7 million barrel decline. Write to Ira Iosebashvili at email@example.com
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