Gold Rush: Bullion Tracks Record-High Prices After Fed Indicates Pause

With the Federal Reserve hiking the policy rate by 25 basis points on Wednesday and hinting it could pause rate hikes, gold prices hovered near record highs during Thursday morning Asia session.

What Happened: The dollar index was also down 0.24%, supporting the rally in gold as it makes the dollar-priced commodity more affordable for buyers in other countries.

Also Read: How To Invest In Gold

Spot gold was trading 0.16% higher near the $2,042 per ounce level at the time of writing. Earlier, the yellow metal breached the $2,072 per ounce level, nearing its record high of $2,072.49 per ounce, according to a Reuters report. The SPDR Gold Trust GLD and the iShares Gold Trust IAU gained over 0.8%.

The Fed's change in language about future policy was notable this time. The phrase “in determining the extent of future increases in the target range” was deleted from the FOMC’s May policy statement and replaced with “in determining the extent to which additional policy firming may be appropriate.”

Apart from the rate hike pause, the one thing that is still working in favor of gold is its safe haven status as banking turmoil seems far from over.

Expert Take: Yeap Jun Rong, market analyst at IG, told Reuters that concerns in the banking space remain unresolved, which will put a cautious stance in the risk environment, pulling safe-haven flows for gold in the event of further fallouts.

The analyst also said, "Lower yields and a weaker dollar in the aftermath of the recent Fed meet and changes in the policy statement language providing the conviction that the central bank will likely shift towards a rate pause."

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