Gold prices gained on Thursday as the US Federal Reserve raised interest rates as expected, with investors focusing on the Russia-Ukraine peace talks.
Spot gold rose 0.4% to $1,935.89/oz by 4.36am GMT after touching its lowest level since February 28 at $1,894.70 on Wednesday. US gold futures also rose 1.5% to $1,937.40.
“Right now it’s more of Asia Pacific markets digesting what the Fed did. So, we see gold a bit higher at the open, because the takeaway from the Fed was ‘we’re going to do a lot of hiking now, but not a lot of structural hiking’,” said Ilya Spivak, a currency strategist at DailyFX.
The US central bank raised interest rates for the first time since 2018 and laid out an aggressive plan to stamp out inflation. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion. The Fed’s decision lifted the US 10-year treasury yields to their highest since May 2019 in the last session.
“The move in dollar and stocks was much more aggressive than the move in gold. And that’s probably the Ukraine risks still lingering, where it’s not the all-clear yet,” Spivak added.
Ukrainian President Volodymyr Zelensky said negotiations were becoming “more realistic” and Russia said proposals under discussion were “close to an agreement”.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.8% to 1,070.53 tonnes on Wednesday — its highest since March 2021. Palladium, used by carmakers in catalytic converters to curb emissions, rose 2.6% to $2,471.77/oz. Spot silver was up 0.9% at $25.29/oz, while platinum rose 0.4% to $1,021.50.
Reuters