Gold extends gains to 6-year high as bets on U.S. rate cut grow

Gold rose broadly on the European market on Thursday, extending gains for a third consecutive day, hitting its highest level in nearly six years, on the back of the growing prospects of a US interest rate cut this year after the Federal Reserve meeting.

As of 10:50 GMT, Gold prices rose by 1.5% to trade at $1,380.25 per ounce from the opening of $1,360.34, and recorded the highest level since September 8, 2013 at $1,393.93, and the lowest at $1,357.64.

The metal prices rose yesterday by 1%, the second daily gain, respectively, supported by the decline of US dollar against a basket of currencies following the results of the Federal Reserve meeting.

The dollar index fell more than 0.5% on Thursday, continuing its sharp losses for a second straight day, as the US dollar's sell-off continued against most of its major and minor counterparts, after prospects of a cut in federal interest rates this year grew.

The Federal Reserve kept its benchmark interest rate unchanged at 2.4 percent for the fourth consecutive session, in line with most of the financial market expectations.

The US central bank said the interest rate cuts issue is on the rise, boosting the possibility of a monetary policy easing at the next month meeting, to help the bank to combat growing global and domestic risks.

The global threat is the US trade wars with several countries, especially China, and domestic risks which are based on the rising fears about weak inflation levels in the country.

The Federal Reserve dropped the word "patient" when changing interest rates from the monetary policy statement, and stressed that it will take what is necessary to maintain economic growth in the country, and showed that about a half of its members are ready to reduce borrowing costs in the next few months.

Federal Reserve Chairman Jerome Powell said some of central bank's officials believe the issue of easing monetary policy has been more appropriate in recent times.

Powell confirmed his intention to spend his full four-year term in response to reports that US President Donald Trump was trying to oust him from the presidency of the Federal Reserve.

The Federal Reserve has lowered its forecast for the pace of inflation in the United States to 1.5% this year from 1.8% on average in March, and also forecasted that inflation would not reach the target of 2% next year.

Gold holdings at the SPDR Gold Trust Fund (The world's largest gold-backed fund) was unchanged yesterday for a third consecutive day to maintain 764.1 metric tonnes, the highest since April 3.