By Zhang Mengying
Investing.com – Gold was up on Thursday morning in Asia as investors digested the U.S. Federal Reserve’s decision to deliver a supersized interest rate hike.
Gold futures were up 0.66% to $1,671.75 by 12:23 AM ET (4:23 AM GMT). The dollar, which normally moves inversely to gold, edged down on Thursday morning.
The U.S. Federal Reserve raised interest rates by 75 basis points Wednesday to tame inflation after the U.S. consumer price index rose 8.6% year on year in May, the largest since 1994.
The Fed Chair Jerome Powell said the central bank will deliver another big hike in July, but “today’s 75 basis-point increase is an unusually large one and I do not expect moves of this size to be common.”
The Fed’s decision drove longer-dated U.S. government bond yields lower and nudged the dollar off two-decade highs, which took gold as much as 1.9% higher in the previous session.
Inflationary hedge buying, potential safe-haven demand versus pressure from a higher interest rate regime are keeping gold prices balanced, Tiger Brokers' Michael McCarthy told Reuters.
“Gold has been remarkably range-bound for weeks now (despite major news)... and it’s a real head-scratcher for traders at the moment to work out what exactly will drive gold out of this range,” said McCarthy, adding the dollar’s overall upward trend presented a cautious outlook for gold.
In other precious metals, silver jumped 1.11%. Platinum inched up 0.02%, while palladium gained 0.60%.