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PRECIOUS-Gold drops as dollar rises on Fed's upbeat economic view

Published 17/09/2020, 01:56 pm
© Reuters.
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* Dollar hits more than one-week high

* Fed to hold rates near zero until at least 2023

* Platinum falls more than 2%

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (Updates prices)

By Brijesh Patel

Sept 17 (Reuters) - Gold prices fell on Thursday as the dollar climbed after the U.S. Federal Reserve painted a favourable economic recovery picture but stopped short of offering concrete signals on further stimulus.

Spot gold XAU= was down 0.8% at $1,944.63 per ounce by 0700 GMT. U.S. gold futures GCcv1 slipped 0.9% to $1,951.90.

"Investors across the Asia-Pacific are perhaps not inspired by last night's FOMC (Federal Open Market Committee) meeting, in which the central bank seems to be reluctant to add stimulus in view of improving fundamentals," said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.

"This led to a stronger U.S. dollar, and a weaker gold price."

The dollar index .DXY rose to a more than one-week high against its rivals after the Fed signalled on Wednesday it expected the U.S. economic recovery from the coronavirus crisis to accelerate, with unemployment falling faster than the central bank's forecast in June. USD/

Meanwhile, the Bank of Japan kept monetary policy steady and slightly upgraded its view on the economy, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic. gold some support, the Fed pledged to keep rates pinned near zero levels until inflation was on track to "moderately exceed" its 2% inflation target "for some time". interest rates decrease the opportunity cost of holding non-yielding bullion. Gold is also used as a hedge against inflation.

"Lower-for-longer interest rates, continued quantitative easing by central banks and the U.S. fiscal position potentially debasing the dollar continue to be long-term supportive factors for a higher gold price," said Jeffrey Halley, a senior market analyst at OANDA.

Elsewhere, silver XAG= dropped 1.7% to $26.78 per ounce, platinum XPT= dipped 2.4% to $945.35 and palladium XPD= slipped 1.4% to $2,366.91.

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