Gold supported as global central banks adopt dovish stance

THE US Federal Reserve has lowered the target range for its key interest rates to 1.75-2 per cent (-25bps). The Federal Reserve Open Markets Committee (FOMC) members, though voting in favour of reduced US borrowing costs, have illustrated a fundamental divide over the need for future cuts. Rising economic uncertainties and a protracted Sino-US trade dispute have been cited as key threats towards global growth. Gold prices, though facing headwinds from renewed risk sentiments, remain supported over subdued global growth and monetary policy easing programmes by global central banks.

What should investors look out for in the longer term?

US-China trade negotiations will be of key focus as both parties attempt to bridge core differences before senior-level talks take place next month (Oct 19). The 14-month-long trade rift between the world's two largest economies has undermined business confidence levels substantially whilst raising global trade uncertainties. Simmering tensions in the Middle East over recent attacks on Saudi Aramco will cement support levels for safe haven assets as investors deliberate heightened geopolitical risks. Gold prices will likely stay within range-bound conditions as markets search for fresh catalysts for the near term.