Gold Rallies as USD Plunges to 16-month Lows

May 4, 2016

Gold prices ticked higher as the greenback slid to 16-month lows during the session earlier.

On the Comex division of the New York Mercantile Exchange, gold delivery for June rallied at $1,303.85 per troy ounce, advancing $6.55 or 0.51  percent. Gold has soared for almost 22 percent as the investors expect the Federal Reserve to raise interest rate slowly.

Silver futures for May delivery changed hands to $17.68 per troy ounce, up 2.4 cents or 0.14 percent, while copper futures lost 1.5 cents or 0.64 percent to end at $2.252 per pound.

Earlier today, China’s  Caixin manufacturing purchasing index failed to meet the expectation of the analysts as it reported 49.4 PMI for the month of April, lower than the projected 49.9.

The downfall  of the dollar pushed the yellow metal higher as dollar priced commodities turn out to be cheaper for holders of other currencies as the appeal of the precious metal soars.

Meanwhile, the greenback traded lower against a basket of currencies as the statement of the Bank of Japan and the Federal Reserve weighed on the currency.

The U.S. currency lost 0.62 percent against the yen to change at 105.77, hitting the 18-month lows. After the BOJ decided to keep the interest rate unchanged, the yen remained even stronger. Prior to this, the Federal Reserve held its interest rate as well.

Also, the U.S. dollar index has gone down to its lowest so far this year. The index has slumped to almost 6 percent since January. Before the market close, the index lost 0.45 percent at 92.11

The Federal Reserve reiterated its decision not to rush in raising the interest rate as it focused on the concerns over the global economic slowdown.

The greenback went lower against the euro at 1.1595, up by 0.53  percent. AUD/USD dropped 1.23 percent to change hands at 0.7575 and the NZD/USD declined 0.37 percent to end at 0.06995.

On the other hand, GBP/USD climbed 0.18 percent to 1.4699 while USD/CHF was down by 0.85 percent to 0.9463 at the close. The U.S. dollar remained steady against the Canadian dollar at 1.2524.

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