Gold jumps 1 pct as Fed stance compounds growth worries
By Arijit Bose
BENGALURU, Dec 20 () - Gold jumped more than 1 percent on Thursday, boosted by a crumbling dollar and as sliding stocks prompted an influx of safe-haven bids after the U.S. Federal Reserve's monetary policy stance augmented concerns about slowing global economic growth.
Spot gold climbed 1.6 percent to $1,262.84 per ounce at 1:32 pm EST (1832 GMT), having reached $1,265.28 earlier in the session, a peak since July 9.
"Equity markets are selling off, oil futures are continuing to decline as well and this is prompting investors' flight to safety," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
Concerns about global growth seeped into the stock markets following the Fed's rate hike outlook, as worries of recession inflated, impairing risk sentiment.
Gold regained momentum after a brief dip on Wednesday, immediately following the Fed announcement to raise interest rates for the fourth time this year, with the central bank also signaling "some further gradual" hikes.
"With the Fed being more hawkish (than expected), you would think the economy is doing really well but that's not the case," Streible said.
Also bolstering appeal for gold was a slide in the greenback, which hit a one-month trough earlier in the session after the Fed projected two more rate hikes. Meanwhile markets conjectured that the country's economy may be running out of steam.
"The subsequent sell-off in stocks and drop in bond yields soon attracted renewed buying interest and given the troubled economic outlook into 2019, we see the upside potentially for gold having been strengthened further by the Fed's decision," Saxo Bank analyst Ole Hansen said.
Fears of a federal government shutdown contributed to market angst, while the U.S. Congress tried to avert such a situation by introducing a temporary government funding bill while President Donald Trump said he was "continuing to weigh his options" on whether to sign it.
Pointing to improved appetite for the metal, 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 treaded down 0.8 percent to $1,250.50 per ounce, having hit a record high of $1,283.49 in the previous session. Boosted by concerns about a sustained deficit, the autocatalyst metal has been surpassing gold in brief spurts.
Silver rose 1.2 percent to $14.77 per ounce, having earlier hit its highest since Nov. 2 at $14.84 an ounce, while platinum rose 1 percent to $794.
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