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Gold climbs after Fed gives no clear signal on rates

By 2nd February 2017December 10th, 2019News

Gold hit its highest since mid-November on Thursday after the U.S. Federal Reserve gave no clear signal on the likelihood of a March interest rate increase in its latest statement, prompting another drop in the dollar.      

The U.S. currency slipped to a 12-week low against a basket of currencies after the U.S. central bank gave an upbeat view on the economy but no hint of accelerating rate hikes.     

Spot gold rose to its highest since Nov. 17 at $1,223.62 an ounce and was up 1.1 percent at $1,222.56 by 1035 GMT. U.S. gold futures for April delivery were up $16.80 at $1,225.10.    

The weakening dollar was the main factor driving gold higher, along with concerns over political risk, said Afshin Nabavi, head of trading at MKS.    

“We have the non-farm payrolls tomorrow so I don’t think there will be huge swings today, but having said that, (gold) looks very strong,” he said.    

“The $1,219-$1,220 level is important resistance. If we can break $1,225, very quickly we could see $1,250.”     

Friday’s non-farm payrolls report is seen as a key barometer of the health of the U.S. economy and will be closely watched for signs that growth is strong enough to support further interest rate hikes.     

Gold is highly sensitive to rising U.S. rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Source: Reuters