Gold shines as US Fed hints at pause in rate hikes

Bengaluru — Gold prices advanced on Thursday after the US Federal Reserve hinted it was nearing a pause in its rate-hike cycle, making the safe-haven asset a more attractive bet in a future low-interest environment.

Spot gold was up 0.4% at $1,976.98 per ounce at 4.06am GMT. US gold futures gained 1.6% to $1,979.90.

Traditionally considered a hedge against inflation and economic uncertainties, gold prices jumped 2% on Wednesday after the Fed raised interest rates by an expected 25 basis points (bps), and indicated it might pause further increases after the recent collapse of two US banks. But “much of what we heard from chair Powell really was focused on the Fed being in inflation-fighting mode ... he made very clear that rate cuts are not on their horizon this year,” said Ilya Spivak, head of global macro at Tastylive.

Fed policymakers pointed to just one more rate hike this year, but less easing next year than most thought would be appropriate just three months ago.

Fed chair Jerome Powell in his press conference cautioned that the Fed will do “enough” to bring inflation down to 2%, and it will raise rates higher if it needs to.

“The devil was in the language details and Powell’s presser,” said Nicky Shiels, head of metals strategy at MKS Pamp, but added, “with more financial and economic uncertainty and less Fed hikes, sidelined precious metals investors will re-engage”.

US treasury secretary Janet Yellen told legislators on Wednesday that she has not considered or discussed “blanket insurance” for US banking deposits without approval by Congress.

The dollar index fell 0.2%, making bullion less expensive for overseas buyers.

Spot silver slipped 0.4% to $22.94 per ounce, platinum added 1.1% at $988.61, while palladium lost 0.5% to $1,443.57. 

Reuters