🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

PRECIOUS-Gold jumps to $1,260/oz after Fed statement pressures dollar

Published 17/03/2016, 06:16 am
© Reuters.  PRECIOUS-Gold jumps to $1,260/oz after Fed statement pressures dollar
XAU/USD
-
XAG/USD
-
GC
-
SI
-
PA
-
PL
-
GLD
-
DXY
-

* Gold rallies, dollar turns lower, after Fed statement

* U.S. data shows inflation rose more than expected in Feb

* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC (Rewrites throughout, updates prices; adds Fed statement, comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON, March 16 (Reuters) - Gold rallied 2 percent to $1,260 an ounce on Wednesday, turning higher after the Federal Reserve indicated that the United States continues to face risks from an uncertain global economy, pressuring the dollar.

The U.S. central bank held interest rates steady after its two-day meeting, as expected. However, fresh projections from policymakers showed they expected two quarter-point rate hikes by year's end. U.S. dollar .DXY turned lower after the statement, falling 0.6 percent against a basket of major currencies, a source of support for the precious metal.

Spot gold XAU= jumped 2.3 percent to $1,260.61 an ounce at 3:14 p.m. EDT (1914 GMT), after trading down as much as 0.4 percent to $1,226.87 prior to the statement. U.S. gold futures GCv1 for April delivery settled down 0.1 percent at $1,229.80 an ounce prior to the statement.

Volatility in equities and oil prices, a raft of mixed economic data, and concerns over global growth had curbed expectations for further hikes, allowing gold to rise more than 17 percent this year.

"The 50 basis point average drop in the dot plot for 2016 and 2017 combined with the defensive, almost timorous 'global risks' comment has gold surging almost $25 as two-year yields plummet 9 basis points and the dollar is under heavy pressure," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

Fed policymakers had been expected to leave short-term interest rates unchanged while signaling that a rate hike is not too far off as long as the job market and inflation continue to improve. is highly sensitive to the prospect of rising rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The dollar rose earlier after data showed U.S. core inflation increased more than expected in February, and U.S. housing starts beat expectations for the month. FRX/ world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , said its holdings rose 2.1 tonnes on Tuesday, after the fund reported its biggest one-day outflow since early December on Monday. HLDSPDRGT=XAU

Silver XAG= followed gold higher and rallied 1.9 percent at $15.55 an ounce, while platinum XPT= was up 2.2 percent at $975.90 an ounce and palladium XPD= was up 1.9 percent at $575 50 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-2016 asset returns:

http://reut.rs/1WAiOSC

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.