Gold clings to gains on dovish Fed, softer dollar
SINGAPORE – Gold held on to overnight gains on Thursday as the dollar came under pressure after the Federal Reserve hinted that it may hike US rates later than market expectations and cut economic growth forecasts.
* Spot gold was little changed at $1,185.35 an ounce by 0038 GMT, after gaining 0.3 percent on Wednesday.
* Following a two-day policy meet, Fed policymakers maintained the current near-zero interest rate for now and said a hike would be appropriate only after further improvement in the labour market and greater confidence that inflation would rise.
* With the economy still on track to grow as much as 2 percent for the year, the central bank’s latest policy statement keeps it on track for at least one and perhaps a second rate increase later this year. But the Fed lowered its expectations for 2015 economic growth because of a weak start to the year.
* The dollar languished at one-month lows early on Thursday, as the Fed disappointed some who had hoped for a clearer signal on when the US central bank will lift interest rates.
* A softer greenback boosts dollar-denominated gold, while lower rates also support non-interest-paying bullion.
* Markets will now be focused on more US data due later in the day for clues about the economy and how it would affect the Fed’s monetary policy.
* Attention will also be paid to developments over the Greek debt crisis. The Bank of Greece said the country’s future in the European Union could be at risk without a debt deal with its international creditors, underlining the extent to which officials who once refused any suggestion of “Grexit” are now openly discussing the prospect.
* Despite urgent pleas, including from the White House, there has been little sign of movement since talks between officials from Greece, the European Union, European Central Bank and International Monetary Fund collapsed on Sunday. – Reuters