Jun 16, 2022 12:36AM ET
By: AnalysisWatch
Gold prices rose in Asia on Thursday morning as investors digested the U.S. Federal Reserve's decision to significantly raise interest rates.
Gold futures were trading at $1,671.75 an ounce by 12:23 p.m. ET. The dollar, which normally moves inversely to gold prices, declined Thursday morning.
The Federal Reserve raised interest rates by 75 basis points on Wednesday to combat inflation after the consumer price index in the United States rose 8.6 percent year on year in May, the highest rate since 1994.
Fed Chairman Jerome Powell said the central bank will hold another significant rate hike in July, but "today's 75 basis point increase is unusually large, and I don't expect steps of this magnitude to happen often."
The Fed's decision drove down long-term U.S. Treasury bond yields and plunged the dollar from a 20-year high, pushing gold prices up 1.9 percent in the previous session.
Michael McCarthy of Tiger Brokers told Reuters that gold prices are being offset by buying to hedge inflation and potential demand for a safe haven against pressure from higher interest rates.
"The price of gold has been in a surprising range for weeks now (despite important news) ... and the big question for traders right now is what exactly will take the gold price out of that range," McCarthy said, adding that a general dollar uptrend is a cautious outlook for gold.
Among other precious metals, silver gained 1.11%. Platinum gained 0.02% and palladium rose 0.60%.