Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2% in the regular trading session, holding just over $1,200 ahead of the Fed's rate decision. The metal then rallied more than 1%, reaching $1,220 in electronic trade, after the Fed sent dovish signals while raising interest rates.

As expected, the FOMC raised interest rates by a quarter-point at the two-day meeting that ended this afternoon. Recent comments from prominent Fed officials had removed almost all suspense, and the markets had pretty much priced-in the second hike in three months before the fact.

However, the post-meeting policy statement signaled that the pace of future hikes will remain slow and moderate, which surprised many traders expecting an accelerated schedule of rate increases. The Fed's so-called dot plot, a table of future projections, indicates a broad consensus to hold the number of rate hikes at three per year for 2017, 2018, and 2019.

The dollar fell abruptly on the Fed's dovish posture, plunging more than 1% as traders reassessed their long positions. A falling dollar strengthens gold and other commodities denominated in it for international trade by making them less expensive overseas.

Equities jumped on the Fed decision and Treasury yields fell.

The markets took little notice of some soft U.S. data. The Consumer Price Index rose by 0.1% last month, the smallest amount since last summer. And U.S. retail sales were weak in February, rising a scant 0.1%.

The other precious metals were mixed before the Fed and strongly higher afterward. Silver closed the session flat before jumping nearly 1.9% to $17.25 after hours. Platinum slipped 0.2% and then bounced into gains of 1.8%. Palladium gained 0.5% during regular trade and then added another 2% after hours.

At the Comex close: April gold dipped $1.90 to $1,200.70; May silver was flat at $16; April platinum dropped $2.10 to $936.80; and June palladium added $3.75 to $745.45 an ounce.