Gold prices surged on Friday as the US Federal Reserve lowered interest rates, while the euro surged as traders sold off gold and silver coins.
Gold was trading up 4 per cent to $1,275 an ounce in Sydney.
It has lost some of its appeal as an investment since the global financial crisis.
But it was up by nearly 1 per cent in Melbourne and by 2.4 per cent around the world, according to Bloomberg.
Australian gold prices fell to $15.25 an ounce on Friday, the lowest since February, after the Reserve Bank raised its benchmark interest rate to 1.25 per cent.
Gold prices fell as much as 6 per cent earlier this week, when the US central bank cut rates to 0.75 per cent and said it would buy gold from the European Central Bank.
But that move was later reversed.
Australian markets had a rough start to the week with the Australian dollar, which had gained 1 per per cent against the dollar, falling by almost 6 per – cent against other currencies.
Gold futures rose by more than 5 per cent on Friday.
Australia’s largest miner, Rio Tinto, said its gold mining business will see a profit of $1.4 billion ($1.2 billion) for the year, as well as a profit for the first quarter.
“Rio has been able to generate a net profit of approximately $2.5 billion and it is expected to generate another net profit in the fourth quarter of 2016,” Rio Tunties managing director Darren Niebur said in a statement.
“We are also expecting to be able to offset some of the costs associated with this project.”
Gold prices rose for a second day after a global trade survey showed the US dollar was weaker than most other currencies against a basket of major currencies.
In Europe, the pound fell to its lowest level in two weeks, with gold up 0.7 per cent as investors piled into gold and other assets.US stocks rose after the Fed lowered interest rate forecasts for the US economy, while stocks in China rose, after a new survey showed growth in the country had been slowing in the third quarter.
The Australian dollar has strengthened against the yen and euro after rising on Thursday.
Australian shares rose.
The US central banks’ decision on Friday to lower its benchmark rate to its record low of 1 per, plus one, from 1 per and one to 1 per.25 and one could see a further weakening in the dollar and yen against other major currencies, economists said.
In response, gold and gold futures soared by more like 10 per cent or more, on hopes the Fed could soon raise interest rates further.
It comes after gold futures fell 0.8 per cent Friday on fears the Fed will raise interest rate again, with analysts warning the move would have a ripple effect throughout the economy.
Gold rallied on Friday after the US Fed’s policy committee on Friday approved a rate cut of 1.5 per cent, the biggest since late 2014.
It was up 1.1 per cent by midday, as traders bought up gold coins and silver bars in anticipation of a lower rate.
Gold jumped by more 5 per -cent on Friday in the US.
The dollar was up 0,3 per cent at 106.30 Australian cents.
Silver jumped 2.7 percent on Friday on optimism over the Fed’s rate move.
