Gold advances as US Fed hints rate-hike pause

GOLD prices hovered near record-high levels on Thursday (May 4) after the US Federal Reserve raised interest rates by an expected 25 basis points and hinted it may pause further increases.

Spot gold rose 0.8 per cent at 2,055.54 per ounce by 0035 GMT. US gold futures were up 1.3 per cent at US$2,063.20.

Earlier in the session, bullion prices rose to US$2,072.19 per ounce and hovered close to an all-time high of US$2,072.49 scaled in 2020.

The US central bank raised its benchmark overnight interest rate by a quarter-of-a-percentage point, as expected by markets. The Fed no longer said it “anticipates” further rates increases will be needed, only that it will watch incoming data to determine if more hikes “may be appropriate”.

Lower rates tend to boost demand for the zero-yielding asset.

Fed chair Jerome Powell on Wednesday said, “the case of avoiding a recession is in my view more likely than that of having a recession.”

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Gold prices steady with market focus on US Federal Reserve rate decision

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The European Central Bank is expected later in the day to raise interest rates for the seventh meeting in a row.

The dollar index was down 0.2 per cent, making greenback-priced gold more affordable for overseas buyers.

Spot silver rose 0.5 per cent at US$25.72 per ounce, platinum gained 0.7 per cent to US$1,056.29 while palladium edged 0.8 per cent higher to US$1,433.75. REUTERS