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As Investors Digest Fed Policy Decisions, Gold Prices Rise

Charlie Brooks

Jun 17, 2022 11:11

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As investors processed the U.S. Federal Reserve's decision to implement a colossal interest rate increase, the price of gold increased in Asia on Thursday morning.


At 12:23 AM ET, gold futures rose 0.66 percent to $1,671.75. (4:23 AM GMT). The dollar, which typically swings in the opposite direction of gold, declined on Thursday morning.


Wednesday, the U.S. Federal Reserve increased interest rates by 75 basis points to combat inflation after the U.S. consumer price index jumped 8.6 percent year-over-year in May, the highest increase since 1994.


Jerome Powell, chairman of the Federal Reserve, said that the central bank would implement another hefty rise in July, but "today's 75-basis-point increase is atypically high and I do not anticipate further movements of this magnitude."


The Fed's decision decreased longer-term U.S. government bond rates and moved the dollar off two-decade highs, which pushed gold up as much as 1.9% in the previous session.


Michael McCarthy of Tiger Brokers told Reuters that inflation hedge purchasing, possible safe-haven demand, and pressure from a rising interest rate environment are keeping gold prices stable.


"Gold has remained unusually range-bound for weeks (despite huge news)," said McCarthy, adding that the dollar's general upward trend suggested a cautious picture for gold.


In comparison to other precious metals, silver rose 1.11 percent. Platinum increased by 0.02 percent, whilst palladium increased by 0.60 percent.


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