Gold price snaps losing streak as Fed rate-hike speed gets a rethink
New York (Feb 23) Gold prices tipped higher Thursday, attempting to snap a string of three declines, as the dollar lost ground to chief rivals in the wake of a fuzzier-than-expected interest-rate assessment from the Federal Reserve.
April gold GCJ7, +0.86% rose $6.60, or 0.5%, to $1,239.90 an ounce. Thursday’s gain picks up on after-hours Wednesday gold gains and dollar declines. Those moves were in reaction to Fed meeting minutes that indicated the bank panel could move slower on interest rates than expected.
In the notes from the Fed’s Jan. 31-Feb. 1 meeting, Fed members indicated an interest in hiking rates “fairly soon,” but noted that the fiscal policy of President Donald Trump was still a wild card.
Earlier hints that the Fed would move to raise rates rapidly had led to a stronger dollar. That, in turn, usually provides a headwind to dollar-pegged assets including gold, making them less attractive to buyers using other monetary units.
Following the release of the minutes, however, the dollar declined. And early Thursday, the WSJ Dollar Index, BUXX, -0.23% a measure of the U.S. dollar against 16 major currencies, declined 0.1% to 91.05. The ICE U.S. Dollar Index, DXY, -0.20% which gauges the buck against six rivals, slipped 0.04% to 101.29.
Still, gold has been locked in a fairly tight range as markets take in the nuances of Fed hints on policy.
“You can see that we are stuck in this ugly range of 1218 and 1242 and the price has been consolidating between this range,” said Naeem Aslam, chief market analyst with Think Markets. “We need a new catalyst to break out of this range.”
Inflation risks and Fed aggressiveness can be conflicting factors for gold. “The major reason is inflation here and the market does not really believe that the Fed will be able to increase the interest rate three times this year,” Aslam said.
The exchange-traded fund SPDR Gold Trust GLD, +0.14% was little changed premarket. The iShares Silver ETF SLV, +0.47% rose 0.3%, while the VanEck Vectors Gold Miners GDX, +0.62% rose 0.2%.
In other metals trading on Comex, May silver SIK7, +0.46% rose 5 cents, or 0.3%, at $18.07 an ounce. May copper HGK7, -0.29% fell 2 cents, or 0.7%, to just under $2.73 a pound. June palladium PAM7, +0.76% fell $1.50, or 0.2%, to $768.70 an ounce. April platinum PLJ7, +0.32% declined $1.30, or 0.1%, to $1,001.40 an ounce.
Source: MARKETWATCH
