Gold prices and the US share market are holding firm as investors bet on the US cutting interest rates for the first time in more than a decade.
The US share market has also been buoyant. On Friday, the Dow advanced nearly 1 per cent to a record 27,332 points, while the Nasdaq gained 0.6 per cent and the S&P500 advanced 0.46% to 3,013.8, marking its first close above the 3,000 level.
There has not been a cut in the US interest rate since late 2008, but Federal Reserve chairman Jerome Powell, pictured above, has been forecasting a cut in response to a weakening global economy and rising trade tensions.
“US equities climbed to fresh highs last week, as traders bet a looming potential rate cut from the Fed will keep the party going,” Angus Geddes of fund manager Fat Prophets wrote.
The Fed is meeting on July 30 and 31 to make a formal decision.
It follows similar sentiment in Australia recently — the Reserve Bank of Australia recently slashed interest rates to their lowest point in history, which sent markets rallying.
Phillip Lowe, RBA governor, said the rate cut would “support employment growth and provide greater confidence that inflation will be consistent with the medium-term target”.
“Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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