Gold rises as dollar, yields slip after Fed hike, Powell comments

Gold rises as dollar, yields slip after Fed hike, Powell comments

Gold prices extended gains on Thursday, as the U.S. dollar and Treasury yields fell after the Federal Reserve raised interest rates by 75 basis points as expected and its chairman sounded less hawkish on future hikes.

FUNDAMENTALS


* Spot gold was up 0.2% at $1,736.89 per ounce, as of 0104 GMT, after rising 1% to a two-week high in the previous session.

* U.S. gold futures rose 0.9% to $1,734.80 per ounce.

* The U.S. central bank on Wednesday raised rates by three-quarters of a percentage point for the second straight meeting to combat soaring inflation.

* Fed Chair Jerome Powell said another “unusually large” increase in interest rates may be appropriate at the September meeting, but the decision will be determined by the incoming economic data and it would not give forward guidance.

* The dollar fell 0.6% overnight after comments from Powell spurred hopes for a slower hiking path. A weaker dollar makes greenback-denominated gold less expensive for other currency holders.

* Benchmark U.S. Treasury yields fell to hover near two-month lows. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

* Meanwhile, a sharp fall in purchases by investors pulled global gold demand down 8% in the second quarter compared to the same period in 2021, the World Gold Council said.

* Asian shares made cautious gains on Thursday as investors scented a possible slowdown in the pace of U.S. rate hikes.

* Spot silver eased 0.2% to $19.09 per ounce, platinum gained 0.2% to $888.12, and palladium was steady at $2,029.51.

DATA/EVENTS (GMT)


0900 EU Consumer Confid. Final July

1200 Germany CPI Prelim YY July

1200 Germany HICP Prelim YY July

1230 US GDP Advance Q2

1230 US Initial Jobless Clm Weekly

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