Spot gold rose 0.1% to $1,951.79 an ounce, by 0401 GMT, after hitting its highest level since April 2022 earlier in the session. US gold futures rose 1.3% to $1,967.40.
The Fed on Wednesday announced a rate hike of a quarter of a percentage point after a year of bigger hikes. However, Powell warned against further tightening of monetary policy while noting progress in disinflation, which he said was only in its infancy.
“Although Powell said rate hikes may continue, the market expects the Fed to be less drastic, which is supporting gold. However, we will soon see profit taking and bullion continue to face resistance at the $1,960 level,” Brian Lan said. , Managing Director of Singapore-based reseller GoldSilver Central.
“Going forward, traders will focus on economic data and comments from Fed officials for further direction.”
Gold tends to benefit from a low interest rate environment because it reduces the opportunity cost of holding non-performing bullion.
If there are more signs of a slowing U.S. economy and the Fed continues to cut rates, investor demand for gold will increase, said Caesar Bryan, portfolio manager at Gabelli Gold Fund. Meanwhile, the Bank of England and the European Central Bank are expected to raise rates by 50 basis points later today.
The dollar index fell 0.3%. A weaker greenback makes bullion priced in dollars more attractive to buyers holding other currencies. [USD/]
Elsewhere, spot silver gained 0.8% to $24.17 an ounce, hitting a one-week high.
Platinum rose 0.6% to $1,009.69 while palladium edged down 0.2% to $1,665.82.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Uttaresh.V, Subhranshu Sahu and Nivedita Bhattacharjee)