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Gold futures were trading sharply higher on Thursday, as the U.S. dollar weakened and Treasury yields held steady after the Federal Reserve policy update Wednesday.
The rise for bullion came despite the Fed announcing plans to more aggressively slow its bond purchases and projecting three interest-rake hikes next year. Analysts speculated that gold might be getting support from hedging the economic risks involved with the spread of the Omicron variant of the coronavirus that causes COVID-19.
“This could possibly be because of rising cases due to the Omicron variant, which persuaded investors to take some exposure to the precious metal until the coronavirus situation cools down,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily research note.
February gold
GCG22,
GC00,
was trading $23.40, or 1.3%, higher at $1,787.90 an ounce, following a 0.4% decline on Wednesday, with that decline marking another settlement at the lowest for a most-active contract since Dec. 2, FactSet data show.
In electronic trading after the Fed announcement, prices moved even lower to $1,761.40, but have since gained substantial traction up.
“This is odd because when a central bank acts aggressively, the dollar index usually climbs as higher interest rates push the demand for that currency higher. However, this was not the case after yesterday’s FOMC meeting,” Aslam wrote.
In other Comex trading Wednesday, March silver
SIH22,
was trading 71 cents, or 3.3%, to reach $22.26 an ounce, following a 1.7% decline a day ago.
The dollar, as measured by the ICE U.S. dollar index
DXY,
was trading 0.2% lower, while the 10-year Treasury yield
TMUBMUSD10Y,
was around 1.44%, hanging around the same rate as it was the day before the Fed decision.
