By Gina Lee
Investing.com – Gold was up on Thursday morning in Asia, after the U.S. Federal Reserve hiked interest rates in its latest effort to curb inflation. The Fed highlighted inflation as a risk to the economy while also ruling out larger hikes for the rest of 2022.
Gold futures jumped 1.76% to $1,901.67 by 12:57 AM ET (4:57 AM GMT), after rising 1% earlier in the session. The dollar, which normally moves inversely to gold, inched up on Thursday, but remained near the one-month low hit during the previous session.
The Fed hiked its interest rate to 1%, the largest increase since 2000, as it handed down its policy decision on Wednesday. Fed Chairman Jerome Powell said the 75-basis points super-hike feared by investors is “not something that the committee is actively considering,” adding that policymakers view the “neutral” level of the fed funds rate to be 2% to 3%.
Powell also appealed to Americans struggling with high inflation to be patient while policymakers take the hard measures to bring it under control. He also said the Fed has ruled out, for now, a rate hike of three-quarters of a percentage point at the central bank’s upcoming monetary policy meetings.
Gold, which is often perceived as a hedge against rising costs, jumped 1% in the previous session on Powell's statement. U.S. Treasury yields also fell sharply on Wednesday, boosting the yellow metal.
Across the Atlantic, the Bank of England will hand down its policy decision later in the day. Elsewhere, China's Caixin services purchasing managers index was 36.2 in April 2022.
In other precious metals, silver jumped 1.1%, platinum firmed 0.6% to $997.19, and palladium rose 0.8%.