From Gina Lee
Investing.com – Gold rose in Asia Thursday morning, hitting a two-week high as the US Federal Reserve maintained its cautious stance when delivering hers on Wednesday.
jumped 1.25% to $ 1,748.65 by 1:22 p.m. ET (5:22 p.m. GMT).
The Fed said it would keep its rate near zero through 2023 when it closed a two-day meeting on Wednesday. The central bank also said the U.S. economy was on its way to its fastest expansion in nearly 40 years, forecasting 6.5% growth in 2021. Inflation is forecast to be 2.4% above the Fed's 2% target.
"There was a reaction to risk (post-Fed announcement) and the dollar weakened significantly. One might expect the dollar's negativity to support gold. It wasn't, the main logic there really had to do with returns what were gaining higher … They're getting more bullish and that's not a good sign for gold and suggests that the lower trend is likely to continue. There wasn't a big drop because the dollar was weaker, "the said DailyFX currency strategist Ilya Spivak told Reuters.
It rose on Thursday but stayed close to a two-week low. Meanwhile, benchmark US Treasury bond yields hovered near a high of more than a year.
"If the dollar continues its weaker course and Fed tongues continue to pacify yields, it could do gold for a test of $ 1,800," Nicholas Frappell, ABC Bullion's global general manager, told Reuters.
Other central banks that will be making policy decisions towards the end of the week are the Bank of England later in the day and the Bank of Japan on Friday.
In other precious metals, palladium gained 1.5% and extended its rally to its highest level since March 2, 2020 after producer Nornickel lowered its production forecast due to waterlogging in two Siberian mines. Silver and platinum both rose 0.4%.
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