Gold at one-week high, Fed shows no sign of speeding up rate hikes | Reuters

By Marcy Nicholson and Zandi Shabalala | NEW YORK/LONDON NEW YORK/LONDON Gold rallied more than 1.5 percent to a one-week high on Wednesday, as the U.S. Federal Reserve called for gradual monetary tightening after raising interest rates by an expected 25 basis points for the second time in three months.The central bank said in its policy statement that further hikes would only be 'gradual,' with officials sticking to their outlook for two more rate hikes this year and three more in 2018.The U.S.

Reuters March 16, 2017 02:00:06 IST
Gold at one-week high, Fed shows no sign of speeding up rate hikes
| Reuters

Gold at oneweek high Fed shows no sign of speeding up rate hikes
 Reuters

By Marcy Nicholson and Zandi Shabalala
| NEW YORK/LONDON

NEW YORK/LONDON Gold rallied more than 1.5 percent to a one-week high on Wednesday, as the U.S. Federal Reserve called for gradual monetary tightening after raising interest rates by an expected 25 basis points for the second time in three months.The central bank said in its policy statement that further hikes would only be "gradual," with officials sticking to their outlook for two more rate hikes this year and three more in 2018.The U.S. dollar index .DXY fell to a two-week low, helping lift gold which is denominated in dollars and so became cheaper for holders of other currencies, while the 10-year Treasury yields US10YT=RR tumbled and U.S. stock markets extended gains. [MKTS/GLOB]Spot gold XAU= was up 1.6 percent at $1,217.81 an ounce by 3:01 p.m. EDT (1901 GMT), after rising to $1,219.36, the highest since March 7. It was on track for its biggest one-day jump since September.U.S. gold futures GCcv1, which closed ahead of the Fed statement, settled down 0.2 percent at $1,200.70.

"After loitering around $1,200 for most of the session, gold surged smartly higher after the FOMC only lifted its weighted projections by a marginal 9 basis points in 2018 and 2019," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York."The Fed seems clearly happy to be an indulgent parent couching the rate hike in the gentlest terms possible."Gold is highly exposed to interest rates, as rising rates lift the opportunity cost of holding non-yielding bullion.

"The wording in the statement was only marginally changed to reflect the fact that underlying inflation remains slightly below 2 percent, and that there have been signs of somewhat firmer business fixed investment in the first quarter," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto. Investors were also focusing on Wednesday's elections in the Netherlands, which have been boosting gold's safe-haven appeal.

Some said looming Brexit talks also added to the geopolitical risk.Gold prices have fallen more than 5 percent since the precious metal failed to sustain a break above its 200-day moving average at around $1,261 in late February.Silver XAG= rose 2.3 percent at $17.22 an ounce.Platinum XPT= was up 2 percent at $951 per ounce while palladium XPD= was up 2.2 percent at $760, after tapping a 10-week low. (Additional reporting by Nallur Sethuraman in Bengaluru; editing by Susan Fenton and Chizu Nomiyama)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.