The possibility of US interest rate lowering and tensions in the Middle East drag a series of markets to go up yesterday.
Closing the session yesterday, the world gold price increased to 28 USD, to 1,388 USD an ounce. During the session, precious metals sometimes reached 1,392 USD – the highest since September 2013. Going to the Asian session this morning, the price is still going up, currently touching USD 1,393.
Prices accelerated from the previous session, after the information that the US Federal Reserve (Fed) could reduce interest rates next month. Decreasing interest rates will reduce the opportunity cost of holding non-paying fixed instruments, such as gold. Besides, it also puts pressure on the dollar, making it cheaper to convert to other currencies.
The teller works on the New York Stock Exchange (NYSE).
The possibility that Fed will soon reduce the interest rate will pull up US stocks yesterday. At the close, DJIA increased by 0.9%. The Nasdaq Composite increased 0.8%. Meanwhile, S&P 500 increased by nearly 1%, reaching a record of 2,954 points.
In recent weeks, US stocks have risen as investors expect interest rates to fall and the US – China restores trade negotiations. This month, S&P 500 increased by 7%.
Even so, Wall Street’s rise was pinned down by escalating tensions between the US and Iran. Yesterday, a US reconnaissance unmanned aircraft was shot down by Iran in the Strait of Hormuz. This is also where two tankers were attacked last week. The US accuses Iran of being behind the attack.
Geopolitical tensions in the Middle East also pull up oil prices. Because this is the place where 20% of the world’s crude oil is produced. US crude oil inventories fell, and the possibility that Fed lowered interest rates, could stimulate growth in the world’s largest oil consuming country also supported oil prices.
US – WTI crude oil rose 5.8% yesterday to 56.65 USD per barrel. Brent oil rose nearly 4% to $ 64.22 and is still moving higher this morning.