Gold Rises Nine Months As The Currency Falls And Recession Fears Reappear

Gold prices reached a nine-month high on Thursday, following a significant gain in the previous session, as the Federal Reserve's resolve to continue rising interest rates weakened the dollar and stoked fears of an economic downturn this year.

The Fed meeting increased gold's desirability as a safe haven this week, resulting in gold's outperformance relative to its peers. After the Fed raised interest rates by a relatively modest 25 basis points (bps) and acknowledged its progress fighting inflation, gold prices increased by almost 1 percent. However, the central bank also voiced uncertainty on the future peak of interest rates.

As U.S. economic growth slowed, this increased expectations for a pause in the Fed's interest rate hikes by mid-2023 and a possible fall in interest rates by the end of the year. This scenario is likely favorable for gold.

Spot gold increased by 0.2% to $1,954.17 per ounce, while gold futures surged to $1,961.15 per ounce by 21:05 ET (02:05 GMT).

The dollar plummeted to a nine-month low versus a basket of currencies, coinciding with gold's ascent. The investment firm ING anticipates that the Federal Reserve will likely hike interest rates once more before announcing a pause.

The dollar was also weighed down by expectations of interest rate increases by the European Central Bank and the Bank of England, which strengthened the euro and the pound. Both banks are likely to raise interest rates by 50 basis points (bps) and foreshadow additional rate increases in an effort to combat excessive inflation.

But rising interest rates are also projected to exert additional pressure on global economic development, which, along with the dollar's perceived weakness, enhances gold's safe-haven position.

Other precious metals advanced as well. Futures for platinum increased 0.6% to $1,018.50 per ounce, while futures for silver gained 2.8% to $24.270 per ounce.

This year, however, industrial metals such as copper declined due to increased fears of a recession.

On Thursday, high-grade copper futures stabilized at $4.1787 per pound, after falling nearly 3% in the previous session.

As a result of contradictory data from the world's top copper importer, there was also concern about China's economic recovery.