Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold surged 2.2% to close at a two-week high above $1,227 as the dollar weakened after the Fed's dovish rate hike. It was the metal's biggest one-day rise since last June, when the UK voted for Brexit.

At the close of its two-day policy meeting yesterday, the FOMC announced a quarter-point rate increase. The move was universally expected but the cautionary posture that accompanied the decision was unexpected. The Fed's dot-plot, or forecast for future rate hikes, was unchanged at three per year through 2019, and tweaks to the post-meeting statement signaled disinclination to accelerate the process.

The dollar immediately dropped 1% on the Fed decision and extended its losses today as traders betting on a more hawkish tone were forced to unwind long positions. A falling dollar boosts gold and other commodities priced in it for international trade by making them less expensive to users of other currencies.

Further supporting sentiment for gold, the Atlanta Fed held its real GDP forecast for the first quarter at a meager 0.9%.

The other precious also rallied strongly, with silver gaining 2.4% while platinum and palladium rose 2.3% and 2.8%, respectively.

At the Comex close: April gold surged $26.40 to $1,227.10; May silver gained 41 cents at $17.33; April platinum rose $21.60 to $958.40; and June palladium climbed $21.20 to $766.65 an ounce.