Gold jumped 1 per cent on Thursday, supported by a dip in the dollar and as global shares slumped after the US Federal Reserve quashed hopes of a toned-down approach to its rate hike trajectory. Spot gold climbed 1.6 percent to $1,262.84 per ounce at 1:32 pm EST (1832 GMT), having reached $1,265.28 earlier in the session, a peak since July 9. The U.S. stocks extended losses on Thursday and Friday, driven by the Fed's rate hike and the prospect of a partial government shutdown.
The Fed's commitment on Wednesday to retain the core of its plan to tighten monetary policy, despite rising uncertainty about global economic growth, rattled stock markets and pressured the dollar, making USA currency-denominated gold more appealing for non-U.S. investors.
Prices crossed the 200-day moving average around $1,252 an ounce before the Fed's statement on Wednesday.
On Thursday, the implied yield on the eurodollar contract settling in December 2020 was 19 basis points below the implied yield on the December 2019 contract, evidence that traders see a better-than-even chance that rates will be cut by a quarter of a percentage point over that period.
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The dollar index, a measure of the greenback's strength versus a group of six major peers, edged lower after rallying in the previous session as a vote on Brexit deal was postponed. For the past three years rate futures traders have expressed scepticism the Fed would deliver as many rate hikes as promised. Lower interest rates also tend to weigh on USA yields and the dollar, in which gold is priced.
Williams' soothing remarks came after a sharp sell-off following the Fed's Wednesday announcement, in which it raised the US federal funds rate by a quarter of a percentage point, to a range of 2.25 to 2.5 percent. Meanwhile, the dollar also remained under pressure due to a weaker outlook towards the U.S. interest rates and the economy.
As investors flocked to the safety of government bonds, USA benchmark Treasury yields fell to more than eight-month lows on Wednesday.
Among other precious metals, spot silver was up 0.3 per cent at $14.57 per ounce, while palladium rose 0.3 per cent to $1,221.35.
Silver rose 1.2 percent to $14.77 per ounce, having earlier hit its highest since November 2 at $14.84 an ounce, while platinum rose 1 percent to $794.