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Fed hikes rates by 25 basis points
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Fed policymakers see one more rate hike this year
(Adds comment, updates prices)
By Ashitha Shivaprasad
March 23 (Reuters) - Gold prices extended gains on
Thursday after the Federal Reserve signalled a potential end to
its monetary tightening cycle could be on the horizon.
Spot gold was up 0.3% at $1,975.73 per ounce, as of 1110 GMT. U.S. gold futures gained 1.6% to $1,980.3. "The thought of peak U.S. rates being within reach is bolstering prices of the zero-yielding precious metal," said Han Tan, chief market analyst at Exinity. "As long as market expectations for a 2023 rate cut remain intact, gold may well revisit the psychologically-important $2,000 mark."
The Fed on Wednesday raised rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs given concerns about the banking sector after two U.S. lenders collapsed earlier this month.
Fed policymakers believe beating back inflation may require just one more interest rate hike this year. However, Fed Chair Jerome Powell in his news conference warned that the Fed would do "enough" to bring inflation down to 2%, and raise rates higher if it needed to. Goldman Sachs raised its gold price forecasts, describing it as the best hedge against financial risks, joining similar upward revisions by Citi, ANZ and Commerzbank.
Gold on Monday hit a one-year high, breaching the key $2,000 on safe-haven demand spurred by the banking turmoil, though later ceded some ground after the rescue of Credit Suisse.
Gold needs to break above resistance at $1,998-$2,000 to
open the door to $2,009 and on the flip side a break below
support at $1,960 could open the door to $1,934, said Fiona
Cincotta, senior financial markets analyst at City Index said in
a note.
Meanwhile, the Bank of England is expected to raise interest
rates for the 11th time in a row later on Thursday.
Spot silver slipped 0.6% to $22.89 per ounce,
platinum added 0.7% at $985.22, and palladium was
little changed at $1,450.29.
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(Reporting by Ashitha Shivaprasad in Bengaluru
Editing by Tomasz Janowski, Elaine Hardcastle)
