Gold steadies after hitting two-week high

23/03/2018 07:11 AST

Gold steadied on Thursday below a two-week high hit in the previous session as the dollar slid after the US Federal Reserve showed a less hawkish stance on rates than expected.

The Fed raised its key rate by 25 basis on Wednesday and flagged at least two more increases this year, stopping short of pointing to three increases that some economists predicted.

The dollar dropped to a month low versus a currency basket on Thursday, before recovering slightly and moving into positive territory. A stronger dollar makes dollar-priced gold costlier for holders of other currencies.

Although the Federal Reserve’s outlook for 2018 was seen as bearish, the central bank was otherwise upbeat on the economy, revising up rate projections for 2019 and 2020 and raising the estimated longer-term “neutral” interest rate a touch.

“(Gold’s) initial reaction to the Fed was positive, but then reading through to 2019 and 2020 you see potentially a faster pace of (rate) tightening, so it’s like giving with one hand and taking away with the other,” ICBC Standard Bank analyst Tom Kendall said. “Gold is doing pretty well to be trading where it is. You’ve got conflicting signals on the macro-economic and political side, and softening (physical) demand, so net gold is comfortable in its existing range,” he added. Spot gold dipped 0.1 per cent to $1,330.49 per ounce at 1440 GMT.

Prices rose to a two-week high of $1,336.59 on Wednesday, and also registered their biggest single-day percentage gain since May 17, 2017. US gold futures for April delivery rose 0.7 per cent to $1,330.40 per ounce. In the wider markets, Europe and US equities were in the red as technology stocks stayed under pressure and as Beijing braced for new tariffs from US President Donald Trump on some $60 billion worth of Chinese imports.

The Gulf Today