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PRECIOUS-Gold rises as Fed's Powell allays fears over large rate hikes

PRECIOUS-Gold rises as Fed's Powell allays fears over large rate hikes

Reuters · 07/27/2022 22:30
PRECIOUS-Gold rises as Fed's Powell allays fears over large rate hikes

Dollar hits three-week low

Fed raises rates by 75 basis points as expected

Global gold demand down 8% in Q2 - WGC

Palladium up more than 2%

Adds milestone, updates prices

By Brijesh Patel

- Gold prices rose to a more than two-week high on Thursday after U.S. Federal Reserve Chair Jerome Powell's comments indicated a less aggressive Fed rate-hike trajectory, dragging the dollar lower.

Spot gold XAU= was up 0.6% at $1,743.49 per ounce, as of 0711 GMT, its highest since July 13.

U.S. gold futures GCv1 rose 1.1% to $1,737.40.

The U.S. central bank on Wednesday raised rates by three-quarters of a percentage point for a second straight meeting to combat soaring inflation.

Powell said another "unusually large" increase in interest rates may be appropriate at the September meeting, but the decision will be determined by the incoming economic data and it would give forward guidance.

"Powell left the door slightly open to a review of the rate situation and provided some sort of light at the end of the tunnel that we're going to be seeing increasing rates going into year as well," said Edward Meir, an analyst with ED&F Man Capital Markets.

"In the -term, gold prices are expected to move higher with a good chance of testing resistance between $1,780 to $1,800 over the month."

The dollar =USD fell 0.6% overnight and was languishing a three-week low on Thursday against its rivals, making greenback-denominated gold less expensive for other currency holders. USD/

Meanwhile, a sharp fall in purchases by investors pulled global gold demand down 8% in the second quarter compared to the same period in 2021, the World Gold Council said.

Spot silver XAG= gained 1.1% to $19.34 per ounce, platinum XPT= rose 0.9% to $894.14, and palladium XPD= climbed 2.3% to $2,077.79.

(Reporting by Brijesh Patel in Bengaluru; Editing by Uttaresh.V, Sherry Jacob-Phillips and Vinay Dwivedi)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.))