Gold rises 1% as less hawkish Fed calms nerves
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Gold prices rose more than 1% on Thursday as Federal Reserve Chairman Jerome Powell allayed investor fears over bigger interest rate hikes in the U.S. central bank's efforts to rein in soaring inflation.
As expected, the Fed raised interest rates on Wednesday by 50 basis points (bp), the biggest jump in 22 years. However, Powell told reporters afterwards it was not considering 75-bp moves in the future.
Spot gold was up 0.9% to $1,896.90 per ounce at 0956 GMT, having earlier hit its highest since April 29. U.S. gold futures climbed 1.5% to $1,896.20.
"The question marks of policy mistakes is being raised, what if the Fed does too much in this cycle and then you get recession risks and then gold as a defensive asset will come back into the fore and is getting some support from that standpoint," said Nitesh Shah, a WisdomTree analyst.
Rate hikes tend to lift bond yields, raising the opportunity cost of holding zero-yielding bullion and boosting the dollar, in which gold is priced.
The precious metal, which is also perceived as an inflation hedge, is now up for a third straight session in what could be its longest winning streak since mid-April.
"We are also seeing the prospect of living with inflation for longer ... That's why gold is defying both the rise in 10-year yields and the gain in the dollar that we've seen," Shah added.
The dollar index edged up 0.3% on the day, having fallen to a week-low earlier, while the benchmark U.S. 10-year Treasury yields crawled higher towards multi-year high. [USD/] [US/]
Spot silver was flat at $22.96 per ounce, while platinum dropped 1.1% to $980.02 and palladium dipped 0.5% to $2,245.22.
