The gold price jumped to one-and-half week high after the Fed cautioned a weaker US growth and suggests more patience to Fed rate hikes.
Spot gold price was last seen at $1,174.50, climbing up $2.50 from where it concluded on Wednesday. The precious metal rose more than two percent after the FOMC statement was thought to be more dovish than expected.
While the FOMC did removed its pledge to be “patient” with its monetary policy, it also said that an April rate hike is unlikely.
“The overall tone of the Fed statement was cautious in its approach to rate normalization and markets interpreted that as dovish. Dropping the pledge to be ‘patient’ marks a shift away from the explicit calendar-based guidance on the future policy path to be more data-dependent guidance,” said economists from United Overseas Bank.
What was noteworthy was that the central bank noted “economic growth has moderated somewhat” over the past month, which is a significant downgrade from the last statement wherein it said that activity rose “at a solid pace”.
“Traders were cautious ahead of the FOMC but were quick to accumulate immediately following the announcement. The prospect of continued low interest rates in the US pushed the greenback sharply lower and therefore boosted most asset prices denominated in USD,” said broker MKS Capital.
The dollar was significantly lower overnight, with the dollar index sliding close to two percent lower from 99.62 to 97.7. The weaker dollar gave traders impetus to bargain-hunt on recent lower bullion prices, especially since rate hikes are deemed less imminent.
In the other precious metals, silver was last up five cents to $15.99 per ounce. The PGMs were mixed, with platinum up a dollar to $1,128 while palladium slipped $3 to $782 after its three percent gains overnight.
The post Gold price gains on weaker dollar after Fed cautioned weaker economic growth appeared first on The Bullion Desk.
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