Gold jumped 1 percent on Thursday, supported by a dip in the dollar and as global shares slumped after the U.S. Federal Reserve quashed hopes of a toned-down approach to its rate hike trajectory.
Spot gold was trading at $1,255.08 per ounce by 1312 GMT, having reached $1,258.03 in the previous session, its highest level since July 10.
U.S. gold futures were up 0.2 percent at $1,258.40 per ounce.
“Dollar weakness is the main reason why we’re seeing gold go up. This is a move across all the precious metals, which suggests this is mainly coming from the dollar side,” Julius Baer analyst Carsten Menke said.
Weakness in equity markets was also lifting demand for safe-haven bullion, Menke said.
Global stock markets slumped after the Fed dashed investor hopes of a more dovish policy outlook and the dollar index fell to a one-month low, making gold more appealing for non-U.S. investors.
“With the outlook for just two rate hikes in 2019, down from three at the (Fed’s) September meeting, this is part of the reason the dollar is undermined and gold underpinned,” said Fawad Razaqzada, an analyst with Forex.com.
Gold also recouped losses from late in the previous session in the aftermath of the Fed announcement. The central bank raised interest rates for the fourth time this year and signalled “some further gradual” hikes.
“The market was looking for an even more cautious assessment given that the equity markets have been suffering and the economy is showing signs of a slowdown globally. These hopes were disappointed,” Menke said.
Gold has risen more than 8 percent from 19-month lows hit in mid-August and is on track for its biggest quarterly gain since March 2017.
“The situation for gold has improved of late, in our opinion. Gold is making a renewed bid to overcome the technically important 200-day moving average this morning,” Commerzbank analysts said in a note.
“The technical picture has brightened, in other words, and gold demand is likewise picking up again.”
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, jumped to their highest level in four months this week.
Among other precious metals, palladium rose 0.6 percent to $1,266.93 per ounce, having hit a record high of $1,283.49 in the previous session.
Silver gained 0.8 percent to $14.71 per ounce, while platinum rose 0.7 percent to $791.70 per ounce. (Reporting by Swati Verma in Bengaluru; Editing by Dale Hudson)
