Gold and silver are rallying ahead of the U.S. Federal Reserve’s latest decision on interest rates.
The U.S. central bank is widely expected to leave interest rates unchanged at the conclusion of its latest policy meeting on June 17.
That’s good news for gold and silver. As non-yielding assets, the precious metals perform best when interest rates are lower rather than higher.
Gold and silver are also rallying on news that the U.S. and Iran have reached a deal ​to end their war, sending crude oil prices sharply lower and trading under $80 U.S. per barrel.
The rapid decline in oil’s price, which had been above $110 U.S. a barrel in recent weeks, is expected to lower inflation and lead the U.S. Federal Reserve to hold rates at current levels.
Spot gold’s price is currently at $4,358.00 U.S. per ounce, having risen 8% from a near ⁠six-month low reached over the past week.
At the same time, silver is trading at $70.55 U.S. per ounce, having risen more than 1% in the past day.
With crude oil prices dropping and exerting less upward pressure on inflation, markets have pared their expectations for interest rate hikes this year.
Futures traders now place the odds that the U.S. central bank will raise interest rates in December of this year at ‌56%, down from 70% a week ago.
The Federal Reserve’s June 17 interest rate decision will be the first under new central bank Chair Kevin Warsh.
The likelihood that the U.S. will stand pat on interest rates has boosted investor sentiment towards gold.
A new survey by the World Gold Council found that a record 45% of ‌reserve managers expect to increase their institutions’ gold holdings over the next 12 months.
