Gold climbs over 1% as dollar, yields fall after Fed’s interest-rate decision

Gold prices climbed over 1% on Wednesday as the dollar and US Treasury yields tumbled lower after the Federal Reserve’s interest-rate decision and Chair Powell’s speech.

Spot gold was up 1.7% at USD 2,323.38 per ounce as of 15:15 p.m. ET (1915 GMT), after hitting its lowest level since April 5 earlier in the session.

US gold futures settled 0.4% higher, at USD 2,311.

The dollar eased 0.3%, making gold less expensive for other currency holders. Benchmark US 10-year bond yields also crept lower.

The US Federal Reserve held interest rates steady and flagged a “lack of further progress” towards its 2% inflation objective.

However, the Federal Reserve’s next rate move is unlikely to be an increase, Fed Chair Jerome Powell said, adding that the central bank’s focus has been to maintain its current restrictive policy stance.

“I believe that we’re in like a stagflationary environment that the Fed will ultimately end up cutting at some point forward,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

“In order to rekindle a new flame back up to USD 2,400, we need a new trigger, and then we start talking all-time highs again,” Streible said.

Gold hit a record high of USD 2,431.29 on April 12 due to strong purchases by central banks and demand from Chinese retail investors.

“There is a little more uncertainty about the global economy and along with geopolitical tensions and the uncertainty regarding the political elections, there’s just a lot that is working in favor of gold,” said Chris Gaffney, president of world markets at EverBank.

Data showed US private payrolls increased more than expected in April, suggesting that the labor market maintained its momentum early in the second quarter.

Spot silver rose 2%, to USD 26.81 per ounce, and platinum climbed 2.5%, to USD 956.75. Palladium rose 0.1%, to USD 954.50.

(Reporting by Anushree Mukherjee, Anjana Anil, and Brijesh Patel in Bengaluru; Editing by Pooja Desai)