Gold prices rose in European trade for the third session in a row, hitting ten-month highs and almost touching $2,000 as the dollar declines. 

The Fed extended its policy tightening efforts and hiked rates by 25 basis points as expected, with Powell touting the improvement in reducing US inflation in recent months. 

Gold Prices Today

Gold prices rose over 0.4% to $1,959 an ounce, the highest since April 19, with a session-low at $1,950. 

Gold prices rose 1.15% on Wednesday, the second profit in a row as the dollar gave up ground. 

The Dollar

The dollar index fell 0.35% on Thursday, sharpening its losses for the third straight session and plumbing ten-month lows at 100.82. 

A weaker dollar boosts gold prices and makes them more attractive to holders of other currencies. 

The Fed

The Fed recently increased interest rates by 25 basis points to 4.75%, the highest since September 2007.

Fed Chair Jerome Powell touted the slowdown in consumer prices in recent months, and said the Fed will continue to take decisions every meeting based on the most recent data.

He asserted that policy needs to remain tight for some time, and that Fed officials still need more evidence that inflation is on track towards 2%. 

Economic Developments

Recent data decisively agree that inflation is slowing down alongside economic growth, an indication the Fed's policies are taking a toll. 

Estimates

Despite Powell's recent remarks about extending the tight policies, gold prices are still expected to soldier through before facing a resistance at $1,960. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 1.44 tones yesterday to a total of 918.5 tones. 

Will gold prices pierce $2000?

It's very possible now for gold prices to head above $1,950 and surpass the resistance of $1,960, opening the door towards the important resistance of $2,000, with investors await the crucial US payrolls report tomorrow for more clues. 

Euro rose in European trade for the third straight session against dollar, moving above $1.1 for the first time in ten months as concerns about a policy gap between the US and Europe fade. 

Dollar extended its losses after the Fed wrapped up its meeting and hiked rates by 25 basis points, with Jerome Powell noting the reduction of US inflation in recent months.

EUR/USD rose 0.4% to 1.1033, the highest since April 2022, with a session-low at 1.0984, after rising 1.2% yesterday, the second profit in a row, and the largest such profit since early December.

ECB

Now investors await the European Central Banks's meeting decisions today, after data showed European inflation slowed down in January.

The ECB is preparing for a 0.5% rate hike for the second meeting in a row to 3%, the highest such level in Europe since 2008. 

ECB President Christine Lagarde said recently that inflation remains too high and the bank is committed to continuously increase interest rates until inflation is brought back to 2%.

Lagarde once again repeated the use of the phrase "staying the course" when talking about interest rate decisions at upcoming meetings, meaning the current pace will be maintained at least until the second quarter of the year.

Other ECB members strongly hinted at multiple 0.5% rate hikes in both February and March.

The Dollar

The dollar index fell 0.35% today, plumbing ten-month lows at 100.82 against a basket of major rivals. 

The Fed recently increased interest rates by 25 basis points to 4.75%, the highest since September 2007. 

Fed Chair Jerome Powell touted the slowdown in consumer prices in recent months, and said the Fed will continue to take decisions every meeting based on the most recent data. 

Will euro mark more gains against dollar above $1.1?

Yes it's expected for euro to increase its lead above $1.1 if the ECB opened the way strongly for multiple more 0.5% rate hikes in upcoming meetings, closing the gap between Europe and the US. 

Oil prices fell on Wednesday after an unexpected US crude inventory buildup last week.

The Energy Information Administration reported a buildup of 4.1 million barrels last week to 452.7 million barrels, while analysts expected a drop of a million barrels.

Gasoline stocks rose 2.6 million barrels to 234.6 million barrels, while distillate stocks rose 2.3 million barrels to 117.6 million barrels.

The White House has heavily criticised energy companies, chief of which Chevron, ExxonMobil for marking strong profits instead of raising output to keep a lid on prices.  

US crude futures due in March fell 2.5% to $76.9 a barrel as of 19:48 GMT. 

Brent April futures fell 2.7% to $83.1 a barrel. 

The Federal Reserve announced a rate hike of 25 basis points to 4.75% from 4.5%. 

The slowdown in policy tightening comes as inflationary pressures slow down as well in the US. 

The Fed raised interest rates in by 0.75% in four consecutive meetings before hiking them by 50 basis points at the last meeting.