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Dollar index down 0.3%
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Silver hits 1-week high
(Updates prices)
By Ashitha Shivaprasad
Feb 2 (Reuters) - Gold prices extended gains on Thursday
to touch their highest in more than nine months after the
Federal Reserve raised interest rates by an expected 25 basis
points and Chair Jerome Powell's comments were read as dovish by
the market.
Spot gold was up 0.3% at $1,955.72 per ounce by 0708
GMT, after hitting its highest since April 2022 earlier in the
session. U.S. gold futures gained 1.3% to $1,956.20.
The Fed delivered a quarter-percentage-point rate increase
on Wednesday after a year of larger hikes. However, Powell
warned of further monetary policy tightening while noting the
progress on disinflation, which he said was in its early stages.
"Although Powell said rate hikes might continue, the market
expects the Fed not to be drastic anymore, which is supporting
gold. However, we will soon see some profit-booking and bullion
continues to face resistance at the $1,960 level," said Brian
Lan, managing director at Singapore-based dealer GoldSilver
Central.
"Going forwards, traders will focus on economic data and Fed
officials' comments for further direction."
Gold tends to benefit in a lower interest rate environment, as it reduces the opportunity cost of holding non-yielding bullion. If there are more signs of a slowdown in the U.S. economy and the Fed continues to lower rates, then investor demand for gold will rise, said Caesar Bryan, a portfolio manager at Gabelli Gold Fund. Meanwhile, the Bank of England and the European Central Bank are expected to raise rates by 50 bps later in the day.
The dollar index fell 0.3%. A weaker greenback makes dollar-priced bullion more attractive for buyers holding other currencies. Elsewhere, spot silver rose 0.7% to $24.1461 per ounce, scaling a one-week high.
Platinum added 0.7% to $1,010.55 and palladium edged 0.2% higher to $1,672.55. (Reporting by Ashitha Shivaprasad and Arundhati Sarkar in Bengaluru; editing by Uttaresh.V, Subhranshu Sahu and Nivedita Bhattacharjee)
