Gold extends gains to ten-month high on Powell's remarks

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.