This post was originally published on this site
Gold futures were surging Thursday morning, finding support as the dollar weakened and investors deemed the first interest-rate hike since 2018 to combat inflation as less of a headwind to bullion in the near term.
“Gold price has seen decent surge since the Fed decision as the Fed only increased the interest rate by 25 basis points while some thought the Fed may increase the interest rate by 50 basis points,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Thursday note.
April gold
GCJ22,
was trading $37.70, or 2%, higher at $1,946.90 an ounce, after the contract on Wednesday lost 1.1%, marking the lowest most-active finish since Feb. 28, according to FactSet data.
On Wednesday, the Fed said it would raise fed fund futures by a quarter percentage point to between 0.25% and 0.5%. It also laid out plans for ongoing increases in the Fed policy rate.
Some commodity strategists speculated that the central bank’s subsequent actions will be more dovish, accounting for the potential for throwing the economy off kilter, with the Russia-Ukraine conflict exacerbating concerns about higher inflation and supply-chain snarls.
Aslam said that “for bulls to be fully confident about the gold price,” they need the price to stay “above the 1,900-price mark,” and futures to break above $2,000 at some point soon.
The rally for precious metal on Thursday comes as the dollar was slumping, down 0.4%, as measured by the ICE U.S. Dollar Index
DXY,
A weaker dollar can make dollar-pegged commodities more appealing to overseas buyers.
