Gold futures contracts edged higher, this morning, during the Asian trade session. The yellow metal extended gains from the previous session. Gains comes after the Federal Reserve disappointed investors who had expected a more hawkish view on interest rate rises.
As of 12:30 am GMT, spot gold (XAU/USD) was up 0.1 percent to $1,333.41 per ounce. Price action was up .6 percent in the previous session. That was the biggest one day percentage gain since May 17, 2017.
U.S. gold futures, for April delivery, were up, this morning, by 0.9 percent to $1,333.70 per ounce.
Against a basket of six rival Forex pairs, the dollar was down 0.3 percent. It was last trading at 89.524. This comes after losing as much as 0.7 percent overnight.
Gold Traders digest the Fed and Look to the Bank of England
The Federal Reserve Board, through its policy arm, the Federal Open Markets Committee (FOMC), raised interest rates, as expected by 25vbasis points, on Wednesday. The Fed also said they plan for at least two more hikes in 2018. The central bank highlighted a growing confidence that tax cuts and government spending will boost the local economy. They should also support inflation and give way to more future tightening.
The Trump administration’s basket of tax cuts and government spending may leave the U.S. economy with a “hangover in two years”, this was in the Fed forecasts that show monetary policy moving into “restrictive” territory. This is the first time in more than a decade that this is happening.
Britain’s central bank, the Bank of England, is likely to keep on course today, when they announce their monetary policy decision. Investors are looking for an interest rate rise in May. This move would take the U.K. borrowing costs above their emergency levels for the first time since the financial crisis in 2008/2009.