Gold Rallies Near Two Week High On Weak Dollar

COMEX Gold approached two week highs following the recent recovery as a break above $ 1300 per ounce supported the sentiments for the yellow metal after the US Fed hikes rates yesterday. The US dollar index has resumed its selling spree and commodities are holding up. COMEX Gold is currently trading at $ 1306.40 per ounce, up 0.39% on the day. MCX Gold futures are currently quoting at Rs 31310 per 10 grams, up 0.54% on the day after a strong opening.

US Federal Reserve indicated that it will hike interest rates more aggressively this year and the next as the US economy continues to grow at an impressive pace. Following its two-day monetary policy meeting, the Federal Reserve raised interest rates by 25 basis points Wednesday. The federal funds rate is now within a range between 1.75% and 2.00%. Gold traders saw the underlying message from the Fed announcement as supportive for the yellow metal, thereby pushing it up. Fed will likely raise interest rates two more times this year. Interest rates are expected to increase to 3.1% next year, up from the previous estimate of 2.9%.

Meanwhile, the US dollar index has dropped after the Fed announcement and currently quotes at 93.33, down 0.26% on the day. The current levels are the lowest in nearly one month for the index. Weak dollar tends to benefit Gold and other commodities.