Gold climbs after Fed cuts rates in reaction to virus

Bengaluru — Gold prices rose on Wednesday, extending gains from a 3% rise in the previous session as the US Federal Reserve slashed its benchmark interest rate to cushion the economic impact from the fast-spreading coronavirus.

US gold futures gained 0.1% to $1,645.30. The Fed trimmed interest rates by 50 basis points on Tuesday in an emergency move to safeguard the world’s largest economy from the effect of the epidemic. The rate cut was the US central bank’s first outside a regularly scheduled policy meeting since 2008 at the height of the financial crisis. “If the Fed cuts rates too deep, it would give a very strong signal that we are in a crisis,” Yan said, adding that the Fed might maintain status quo in its March meeting and gauge the economy’s performance before taking further steps.

However, the emergency cut did not calm investor nerves as all three major US stock indices closed nearly 3% lower overnight, while Asian shares wobbled on Wednesday. Investors are awaiting the release of the US ISM non-manufacturing PMI data and the Fed’s Beige Book of economic condition, both due later in the day.

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