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. However, the US dollar index witnessed a sharp reversal from its two week low and pulled Gold lower. COMEX Gold is currently trading at $ 1305 per ounce, down 0.25% on the day. MCX Gold futures closed at Rs 31390 per 10 grams, up 0.79% on the day after hitting highs above Rs 31400 levels.
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%.
The dollar had dropped following the Fed meet but gained back impressively after the European Central Bank (ECB) pledged to keep interest rates at present. The ECB main rate was held at 0.00% while the deposit facility rate was kept at -0.40%. Rates will remain at record lows until at least mid-2019 while the QE bond buying programme will finish at end of year. The bank said it would continue to purchase 30 billion euros a month of bonds through the end of September, as planned. It then plans to cut purchases to 15 billion euros a month through the end of December. The dollar index soared to a near two wee top of 95 today.