* Fed holds rates steady, signals potential cuts
* Gold priced in Australian dollars hits all-time peak
* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl
(Adds comments, graphics, updates prices)
By Karthika Suresh Namboothiri
June 20 (Reuters) - Gold prices surged to a near six-year
peak on Thursday after the U.S. Federal Reserve bank signaled it
was ready to cut interest rates as early as next month to boost
growth, triggering a sharp fall in the dollar.
Spot gold XAU= jumped 2.2% to $1,390.38 per ounce by 1:32
p.m. EDT (1732 GMT). Prices touched $1,392.84, their highest
since early September 2013.
U.S. gold futures GCcv1 settled 3.6% higher at $1,396.90
per ounce.
"More than the actual impact itself, was the shift in
expectations," said Ryan Giannotto, Director of Research at
GraniteShares with reference to the Fed's statement.
"Expectations were very high for the Fed and the market was
forecasting this. But the real risk was that it would not
satiate investors' demand for dovishness."
Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
The Fed on Wednesday signalled interest rate cuts beginning
as early as July, saying it is ready to battle growing global
and domestic economic risks as it took stock of rising trade
tensions and growing concerns about weak inflation. Top Chinese and U.S. officials will resume trade talks in
accordance with the wishes of their leaders, after negotiations
to reach a broad trade deal broke down last month. "Gold has been supported of late by trade and growth
uncertainties, which weakened the U.S. Dollar, caused bonds to
rally and spurred equity market volatility," UBS analysts said
in a note.
"The Fed's dovish pivot on interest rates has pushed the
gold price to a 5-year high and toward the $1,400/oz mark."
The dollar fell 0.5% against a basket of its rivals .DXY
to 96.64, putting it on course for its biggest two-day drop
since February 2018. USD/
Gold in Australian dollars XAUAUD=R was at an all-time
high.
"We believe the bullish market mood points to a short-term
consolidation but still see the longer-term recovery on track.
Later this year, gold should benefit from a weakening US dollar,
followed by returning safe-haven demand next year," Julius Baer
analyst Carsten Menke said in a research note.
Silver XAG= was up 2% to $15.46 per ounce, its highest in
over 12 weeks. Platinum XPT= dropped to $808.00 per ounce and
palladium XPD= declined 0.8% to $1,488.50.
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GRAPHIC-Gold in AUD, JPY https://tmsnrt.rs/2RoLbHD
GRAPHIC-Gold in EUR, Sterling https://tmsnrt.rs/31Ktp6u
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