Gold steady after US Fed cranks up interest rates

GOLD was flat on Thursday (Jun 16) after a jump in the previous session on falling Treasury yields and a weaker dollar, which were driven lower by a large but widely expected interest rate hike announcement from the US Federal Reserve.

Spot gold was little changed at US$1,832.86 per ounce as of 12.34 am GMT. US gold futures rose 1 per cent to US$1,836.90.

The Federal Reserve on Wednesday approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation that US central bank officials acknowledged may be eroding public trust in their power, and being driven by events seen increasingly out of their hands.

Global stocks rallied and government bond yields and the dollar retreated from multi-year highs on Wednesday as investors cheered the Fed's decision to raise interest rates by three-fourths of a percentage point.

Higher short-term US interest rates increase the opportunity cost of holding bullion, which yields no interest.

However, benchmark US 10-year Treasury yields weakened after the announcement, helping demand for greenback-priced gold along with a slide in the dollar, and took bullion prices as much as 1.9 per cent higher on the day.

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Gold edges higher as investors await big Fed rate hike move

The Bank of England looks set to override its worries about a sharp slowdown in the British economy and raise interest rates again on Thursday as it tries to tackle an inflation rate on course for double digits.

Spot silver firmed 0.1 per cent to US$21.68 per ounce, platinum gained 0.7 per cent to US$945.55, and palladium rose 0.5 per cent to US$1,869.24. REUTERS