SPX4,228.33-55.41 -1.29%
DIA337.35-2.57 -0.76%
IXIC12,687.18-278.16 -2.15%

PRECIOUS-Gold hits a three-week high as less hawkish Fed dims dollar

PRECIOUS-Gold hits a three-week high as less hawkish Fed dims dollar

Reuters · 07/28/2022 05:28
PRECIOUS-Gold hits a three-week high as less hawkish Fed dims dollar

Dollar hits a more than three-week low

Next target for gold bulls is $1,750 - analyst

China's gold demand to fall in H2 from 2021 levels - WGC

Recasts, adds comments, updates prices

By Arundhati Sarkar

- Gold prices hit a three-week high on Thursday after U.S. Federal Reserve chair Jerome Powell signalled the central bank could slow the pace of rate hikes in coming months, which weighed on the dollar and Treasury yields.

Spot gold XAU= rose 0.7% to $1,745.20 per ounce by 0912 GMT, its highest since July 8.

U.S. gold futures GCv1 rose 1.4% to $1,743.70.

"The Fed has turned dovish and although signalled rates may rise, likely it will be at a slower pace so as to spook Main Street - that has had a impact on both the U.S. dollar as well as treasury yields, which have given a lift to gold," independent analyst Ross Norman said.

The Fed raised its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday in an effort to cool the most intense breakout of inflation since the 1980s.

Powell said another "unusually large" increase in interest rates may be appropriate at the September policy meeting, but the decision will be determined by the incoming economic data between and then.

Traders have cautiously pared back expectations of further rate rises, as the second quarter GDP figures would provide clarity on the strength of the economy, Norman added.

The dollar index .DXY fell 0.2% to a more than three-week low, making greenback-denominated gold less expensive for other currency holders. USD/

"Gold's relief rally has further to go ... gains we're seeing are part of a much retracement against its bearish trend," City Index senior market analyst Matt Simpson said.

The obvious target for gold bulls is $1,750, a break above which brings $1,770 into focus, Simpson added.

Meanwhile, China's demand for gold jewellery, bars and coins is expected to fall year-on-year in the second half of 2022, a World Gold Council official said, as lockdowns cut consumer spending.

Elsewhere, spot silver XAG= jumped 1.3% to $19.38, platinum XPT= rose 0.7% to $892.36, while palladium XPD= added 2.9% to $2,090.42.

(Reporting by Arundhati Sarkar in Bengaluru; editing by Carmel Crimmins)

((Arundhati.Sarkar@thomsonreuters.com; twitter.com/Arundhati_05; +1 646 223 8780 Ext: 2776))