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BOE raises interest rates for 10th time in a row
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U.S. dollar down 0.1%
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Silver hits 2-week high
(Updates prices, milestone, adds detail)
By Kavya Guduru
Feb 2 (Reuters) - Gold rose to a nine-month high on
Thursday on a subdued dollar, as investors held onto the view
that the U.S. Federal Reserve would soon end its rate hiking
cycle after it announced an expected 25-basis-point increase.
Spot gold rose 0.2% to $1,953.92 per ounce by 1211 GMT, having hit its highest since April 2022. U.S. gold futures gained 1.5% to $1,954.70. The U.S. central bank on Wednesday scaled back to a quarter-percentage-point rate increase after a year of larger hikes. It said it had turned a corner in the fight against high inflation, but that "victory" would still require rates to be increased further and remain elevated at least through 2023. "There's other statements where he (Fed Chair Powell) wanted to try and manage market expectations... But the dovish elements were there enough to continue to push gold higher," said Craig Erlam, a senior market analyst at OANDA. Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion. "Traders seem willing to bypass what policymakers are saying if the data is favourable," Erlam said. But if the data becomes less favourable, the case for either ending the rate-hiking cycle or just a couple more rate hikes becomes difficult and could see gold prices correct lower, he added. The dollar index edged 0.1% lower against its rivals, making dollar-priced bullion more attractive for overseas buyers. Meanwhile, the
Bank of England
raised interest rates for the 10th time in a row on
Thursday but dropped its pledge to keep increasing them
"forcefully" if needed and said inflation had probably peaked.
Spot silver climbed 1.9% to $24.4258 per ounce, scaling an over two-week high. Platinum rose 1.7% to $1,020.62 and palladium edged 0.2% higher to $1,673.45. (Reporting by Kavya Guduru and Arundhati Sarkar in Bengaluru; editing by John Stonestreet and Jason Neely)
