By Gina Lee
Investing.com – Gold was up on Thursday morning in Asia, topping a two-week high as the U.S. Federal Reserve retained its dovish stance as it handed down its on Wednesday.
jumped 1.25% at $1,748.65 by 13:22 PM ET (5:22 AM GMT).
The Fed that it would keep its interest rate near zero until 2023 as it wrapped up a two-day meeting on Wednesday. The central bank also said that the U.S. economy was on track for its fastest expansion in nearly 40 years, predicting 6.5% growth in 2021. Inflation is predicted at 2.4%, above the Fed’s 2% target.
“There was a risk-on response [post-Fed announcement] and the dollar weakened significantly. One might expect dollar negativity to be supportive of gold. That wasn’t what happened, the main logic there really had to do with yields, which were on the march higher… They are getting more optimistic and that doesn’t bode well for gold and suggests that the trend lower is likely to continue. It didn’t get a huge decline because the dollar was weaker,” DailyFX currency strategist Ilya Spivak told Reuters.
The inched up on Thursday but remained near a two-week low. Meanwhile, benchmark U.S. Treasury yields held close to a more-than-one-year peak.
“If the dollar continues its weakening track and yields continue to be calmed by Fed language, then this can set gold up for a test of $1,800,” ABC Bullion global general manager Nicholas Frappell told Reuters.
Other central banks that will hand down policy decisions as the week nears its end 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 the highest level since Mar. 2, 2020, after producer Nornickel cut its output forecast due to waterlogging at two Siberian mines. Silver and platinum both rose 0.4%.
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