Gold rallies 2% on dovish Fed

By Investing.com / March 16, 2017 / in.investing.com / Article Link

Investing.com - Gold prices rallied to a more than one-week high during European morning hours on Thursday, after the Federal Reserve sounded more dovish than anticipated on future rate hikes.

Comex gold futures jumped to a session peak of $1,228.65 a troy ounce, the highest since March 6. It was last at $1,225.55 by 4:10AM ET (08:10GMT), up $24.85, or around 2.1%.

Meanwhile, spot gold was up $6.30 at $1,225.75 per ounce.

The Fed on Wednesday raised its benchmark interest rate by 25 basis points to a target range of 0.75%-to-1% in a widely-expected move, but said further increases would only be "gradual."

Fed officials stuck to their projection for two more hikes this year, when many had expected a more hawkish shift in the Fed's rate hike outlook.

The dollar sank to a one-month low against a basket of major currencies, while Treasury yields fells sharply, in reaction to the Fed's rate view for the rest of the year.

The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

Also on the Comex, silver futures for May delivery surged 53.9 cents, or 3.2%, to $17.46 a troy ounce. It reached a two-week high of $17.53 earlier.

Meanwhile, platinum jumped 3.6% to $970.80, while palladium added 3.4% to $770.80 an ounce.

Elsewhere in metals trading, copper futures tacked on 3.3 cents, or 1.2%, to $2.689 a pound.

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