Slight recovery for gold after two days of losses

Gold prices rebounded on Thursday, marking their first rise after two days of losses as US government bond yields fell after the announcement by the Federal Reserve’s monetary policy committee to begin reducing asset purchases.

Although Fed Chairman Jerome Powell said it was too early to raise interest rates – the classic anti-inflation recipe – he insisted the Fed would use the tools it had “properly” to hold prices.

“Investors are realizing that monetary policy will not be tightening as quickly and vigorously as it feared two months ago, when inflation began to rise sharply,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “Central banks have remained firm in their forecasts that price pressures will begin to ease, thus reducing the risk of a sharp tightening.”

The Bank of England decided on Thursday to keep its key interest rate at 0.1%, despite market forecasts of growth.

Following the BoE decision, the yields on UK government bonds they were retreating. “Yields have stopped rising in the last two weeks, in both Europe and the US, allowing gold to stabilize,” Razaqzada added.

“The precious metal needs the dollar to weaken in order to return even stronger,” he concludes.

THE December delivery gold earned $ 29.60 or 1.7%, closing at $ 1,793.50 per ounce, while the December silver added 68 cents, or 2.9 percent, to $ 23,911 an ounce.

“It was a dovish cut in the Fed’s quantitative easing program, and it became clear that we would have to wait until the summer to hear them admit they were wrong about inflation,” said Edward Moya, senior market analyst at Oanda.

In the other metals, the December copper fell marginally, by less than 1 cent, to $ 4.3205 a pound.

THE January platinum gained 0.7% to $ 1,029.30 an ounce, while palladium December closed at $ 1,996.40 an ounce, up 0.5%,