Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.4% to close under $1,765 as a stronger dollar pressured traders to hedge their bets ahead of the Fed's policy statement. The metal then bounced above $1,781 in electronic trade after the Fed meeting as the dollar fell and bargain-hunters bought gold as an inflation hedge.

At the conclusion of its two-day policy meeting, the Fed announced it will double its taper of monetary easing to $30 billion per month, putting it on schedule to end the emergency program altogether by March. This move was widely expected and already priced into market action.

In addition, the central bank signaled that it may raise interest rates by a quarter-point three times in 2022, according to its forecasting dot-plot, to combat the strongest rise in inflation in nearly 40 years. Dot-plots from previous meetings had indicated a single rate hike next year, so this move was somewhat unexpected.

Gold initially weakened while the dollar strengthened on the Fed's hawkish turn in rate policy. Higher interest rates typically lift the dollar by making it more attractive to Forex traders seeking higher yield. A stronger dollar, in turn, weighs on gold by making it pricier overseas.

But both trades soon reversed directions, with the dollar falling into losses while gold rebounded by around $15 an ounce. Fed Chair Jerome Powell's post-meeting press conference was less hawkish than expected, suggesting policy will adjust in real time.

In addition, Powell acknowledged that inflation may be more persistent than previously thought, he still expects it to subside rapidly staring next year and return to pre-pandemic levels by 2024.

The other precious metals were lower for the session before rebounding after hours. Silver fell 1.7% before recovering a 1% gain. Platinum lost 1.8% and pushed 0.3% in the black. Palladium tumbled 4.4% before trimming the loss to 2.3%.

At the Comex close: February gold slid $7.80 to $1,764.50; March silver dropped 38 cents to $21.55; January platinum lost $16.70 to $894.20; and March palladium shed $71.10 $1,551.60 an ounce.