Gold prices hit a two -week high after Federal Reserve (Fed) Chairman Jerome Powell’s dovish statement had plunged the US dollar lower.
In the Asian session, gold traded stronger around the $ 1,750 per ounce price level after jumping over 200 pips as can be seen on the XAU/USD price chart which measures the value of gold against the USD.
While the Fed expects a faster economic recovery to occur, policymakers remain committed to maintaining interest rates and bond -buying programs despite expectations of rising inflation.
The Fed expects the price increase to be at 2.4% by December, which is much higher than their previous estimate of 1.8% and slightly lower than the central bank’s target of around 2%.
Gold, seen as a hedge to inflation, tends to rise following expectations of rising inflation by the central bank.
However, the rise in gold prices is likely to be limited due to rising US bond yields.
