Gold rose on Thursday after US Federal Reserve chair Jerome Powell signalled the central bank could slow the pace of rate hikes in coming months, but a rise in the dollar prompted the metal to pull back from a three-week peak.
Spot gold was up 0.3% to $1,739.45 per ounce by 1146 GMT, after rising as much as 0.8% – its highest since July 8.
US gold futures rose 1% at $1,736.70.
“Gold’s drop from earlier highs has coincided with the dollar also finding a bit of support. I reckon it is due to investors taking profit ahead of US GDP data later on,” said Fawad Razaqzada, market analyst at City Index.
The key takeaway from the FOMC meeting is that pace of future hikes will depend on data, which makes it extremely difficult to predict gold’s next move, he added.
The Commerce Department’s advance second-quarter US gross domestic product report is due at 1230 GMT. According to a Reuters survey of economists, GDP growth likely rebounded at a 0.5% annualized rate last quarter.
After the conclusion of the central bank’s policy meet, Powell had said another “unusually large” increase in interest rates may be appropriate at its next meeting in September, but the decision will be determined by the incoming economic data between now and then.
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The Fed raised its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday to combat skyrocketing inflation.
“There is an increasing view that the Fed’s hand is being forced into raising rates by events largely outside of their control – and that is supply chain problems,” independent analyst Ross Norman said.
Traders have cautiously pared back expectations of further rate rises, as the second quarter GDP figures would provide clarity on the strength of the economy.
Meanwhile, the dollar index reversed course and was up 0.5%.
Silver rose 1.2% to $19.36, while platinum fell 0.1% to $885.56.
Palladium rose 0.82% to $2,047.62.
Source: Brecorder
