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Metals Stocks: Gold jumps toward 14-month high as investors bet on dovish central banks

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Gold prices on Tuesday jumped to the highest levels in more than a year as comments made in Portugal by European Central Bank President Mario Draghi ahead of a meeting of the Federal Reserve is seen as setting the stage for lower interest rates.

August gold GCQ19, +0.93%  jumped $10.70, or 0.8%, to $1,353.60 an ounce, which would mark the highest settlement for the most-active contract since April 11, 2018 when it closed at $1,360 an ounce, if prices hold, according to FactSet data.

At an annual conference in Sintra, Portugal on Tuesday, Draghi said the ECB could roll out fresh stimulus as soon as its next policy meeting in July, which sent the U.S. dollar lower against the euro and boosted most major equity benchmarks, because investors have been betting that central banks would ease monetary policy in the face of stubbornly low inflation, and a global economic slowdown that is being exacerbated by a tariff battle between the U.S. and other countries.

Draghi’s comments come as the Fed is preparing to start its two-day policy-setting meeting, where markets are widely anticipating that it will at least set the table for a rate cut in the coming month.

Uncertainty about the global economy and the trade conflict have helped to drive appetite for precious metals.

Signs that central bank’s may support rate cuts pushed yields on global debt lower which is bullish for gold which doesn’t offer a yield. The yield on the 10-year Treasury note TMUBMUSD10Y, -2.60%  hit its lowest in more than 20 months at 2.03% while the comparable German debt TMBMKDE-10Y, -32.30% known as the bund, was at a record low at negative 0.322%.

Those factors were helping gold gain traction higher even as the Dow Jones Industrial Average DJIA, +0.09% the S&P 500 index, the Nasdaq Composite Index COMP, +0.62% and European benchmark, the Stoxx Europe 600 Index SXXP, +1.26% all rally.

Meanwhile, July silver SIN19, +0.75%  gained 14 cents, or 1%, at $14.975 an ounce.