NEW YORK, Sept 23 — Gold rose to a two-week high yesterday after the US Federal Reserve’s decision to keep interest rates on hold sent the dollar to its lowest level since the start of last week.
Bullion rallied 1.7 per cent on Wednesday after the Fed stayed pat on rates but indicated it could still tighten monetary policy in the world’s biggest economy by the end of the year.
Gold is highly exposed to monetary policy, particularly in the United States, as higher interest rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which the precious metal is priced.
Spot gold rose for the fourth straight day, up 0.1 per cent at US$1,337.28 (RM5,492.28) an ounce by 2:31pm, after rising 0.5 per cent to US$1,343.64, the highest since September 8.
The dollar index, which measures the greenback against a basket of currencies, slipped to its lowest since September 12 before paring losses.
US gold futures settled up 1 per cent at US$1,344.70.
“This is a follow on from what happened yesterday with the Fed being more dovish, the market is now going through the upside in gold prices,” said ABN AMRO commodity strategist Georgette Boele, adding that gains may be capped around US$1,350.
Markets will closely analyse upcoming US data for clues as to the timing of any rate rise.
“The Fed have signalled that if everything stays the way it is then December is more than likely the next rate rise and this will keep a lid on any rally,” David Govett, head of precious metals at Marex Spectron, said in a note.
World stock indexes jumped and the Nasdaq hit a record high while bonds rallied.
“The lower government bond yields have boosted the appetite for racier assets like equities, while at the same time they have made precious metals… appear more appealing to investors on a relative basis,” said Fawad Razaqzada, market analyst for Forex.com.
RBC Capital Markets said in a note: “Despite gold’s jump yesterday, we think it will remain well short of year-to-date highs, and while it will certainly experience continued volatility in line with a number of other macro assets, we remain cautious through year-end,” RBC said.
Silver rose as much as 1.3 per cent to a two-week high at US$20.06 an ounce.
Platinum rose by as much as 1.7 per cent to US$1,065.80, the highest since September 12, and palladium climbed 2.5 per cent to US$700.30, the highest since September 7. — Reuters