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PRECIOUS-Gold gains as dollar, yields fall after U.S. Fed maintains stance

Published 08/04/2021, 03:14 pm
Updated 08/04/2021, 07:54 pm
©  Reuters
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* Fed committed to support economy until recovery is more secure

* Dollar trading near more than two-week low

* Markets eye Powell's speech at IMF conference

(Recasts, adds comments; updates prices)

By Diptendu Lahiri

April 8 (Reuters) - Gold prices rose on Thursday, as yields on longer-term U.S. Treasuries dropped along with the dollar after the Federal Reserve in its latest policy meeting minutes reinforced expectations that interest rates would remain low for some time.

Spot gold XAU= gained 0.3% at $1,741.85 per ounce by 0927 GMT. U.S. gold futures GCv1 rose 0.1% to $1,742.90 per ounce.

"Gold is gaining at the moment as it is tracing the path of the U.S. Treasuries, which is also putting some pressure on the dollar," said Yingtao Jin, an analyst at StoneX Group. US/ USD/

"As the Fed mentioned, they see the economy strong at the beginning of 2022, but that is at a cost of rising inflation rate, which can go out of hand and that is the time when we will see some solid gains in gold."

Non-yielding gold is widely considered as a hedge against increasing inflation.

Fed officials are committed to supporting the economy until its recovery is more secure, minutes of the U.S. central bank's most recent policy meeting released on Wednesday showed. policymakers also indicated they thought interest rates might need to increase sooner than anticipated, although there was little sense of urgency around that issue in the minutes.

"The Fed was very assuring about its stand on interest rates, although investors are not convinced," said Michael McCarthy, chief market strategist at CMC Markets.

"Investors are expecting the Fed will have to hike interest rates as early as January 2022 as it becomes a huge task once inflation starts going out of control."

Investors now await Fed Chair Jerome Powell's speech at a virtual International Monetary Fund conference later on Thursday.

Among other metals, silver XAG= rose 0.3% to $25.18 per ounce and palladium XPD= was down 0.4% at $2,613.74. Platinum XPT= dipped 0.1% to $1,224.03.

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