Gold edges higher after Federal Reserve signals pause in rate hikes

GOLD prices edged higher on Thursday (Mar 23) after the US Federal Reserve raised interest rates by an expected 25 basis points and signalled it was on the verge of pausing future hikes in view of recent turmoil in the financial sector.

Spot gold was up 0.2 per cent at US$1,972.72 per ounce, as of 0101 GMT. US gold futures gained 1.3 per cent to US$1,974.60.

Gold prices jumped 2 per cent on Wednesday after the Fed raised interest rates, but indicated it might pause further increases in borrowing costs after the recent collapse of two US banks.

Fed policymakers believe beating back inflation may require just one more interest-rate hike this year, but less easing next year than most thought would be appropriate just three months ago.

Gold is traditionally considered a hedge against inflation, and a low interest-rate environment makes non-yielding bullion a more attractive bet.

US Treasury Secretary Janet Yellen told lawmakers on Wednesday that she has not considered or discussed “blanket insurance” to US banking deposits without approval by Congress as a way to stem turmoil caused by two major bank failures this month.

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Fed chair Jerome Powell said on Wednesday banking industry stress could trigger a credit crunch with “significant” implications for an economy that US central bank officials projected will slow even more this year than previously thought.

The dollar index eased 0.1 per cent, making bullion less expensive for buyers holding other currencies. US Treasury yields fell.

Spot silver rose 0.2 per cent to US$23.06 per ounce, platinum added 0.8 per cent at US$986.19, while palladium fell 0.2 per cent to US$1,447.21. REUTERS