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Gold inches up ahead of US Fed rate rise clues

Gold inches up ahead of US Fed rate rise clues

While the Fed raised interest rates by 25 basis points on Wednesday as widely expected, it kept its original forecast of three rate hikes this year, disappointing investors who were expecting a bump up to four after a string of upbeat U.S. economic data.

Fed Chair Janet Yellen pointed to growing faith in the economy's trajectory as the USA central bank raised rates for the second time in three months. Although inflation is "close" to the Fed's 2-percent target, it noted that goal was "symmetric", indicating a possible willingness to allow prices to rise at a slightly faster pace. Investors had widely expected the rate increase.

The euro was down 0.2 percent at $1.0736 after two days of gains against the dollar. "If Wilders does not do as well as expected on Wednesday then we could see the markets start to reduce expectations of a victory for the French National Front leader Marine Le Pen in France's presidential elections in May".

Sterling jumped after the Bank of England kept interest rates on hold but gave a handful of hints in voting results and its minutes that it might raise them soon. That seemed incongruous after a month where the hard numbers have finally begun to point to a weakening of economic growth, as consumers face the effect of a 20 percent fall in the pound, a weaker housing market and uncertainty over jobs and investment as the government gets ready to launch Brexit talks.

The dollar fell 0.7 percent against a basket of key currencies and hit a one-week low against the yen, while the euro hit a session high against the greenback.

A weaker dollar typically strengthens the investment appeal of precious metals, which are priced in the US currency. The metal's nine-session slide that ended Friday had marked the longest streak of declines since July 2015, FactSet data showed.

More news: Hyundai recalls almost a million cars

MSCI's all-country world stock index gained 0.7 per cent, and hit an all-time high.

Commodities The oil market is striving to break a six day losing streak that saw Brent crude prices slump 9.1 per cent amid concerns that Saudi Arabia was not adhering to an Opec production cut deal and that increasing output by USA drillers was adding to a glut. Platinum was up 0.8 percent at $939.60 while palladium added 0.2 percent to reach $745.50. "The reason for the rates rally in the aftermath was the 5-10 year inflation print which fell to a record low of 2.2 percent, which was the lowest level since the survey started in 1979", said Aaron Kohli, an interest rate strategist at BMO Capital Markets in NY, in a research note.

Prices on benchmark 10-year Treasuries fell 8/32 to yield 2.531 percent, up from 2.504 percent late on Wednesday.

Brent crude was six cents lower at $51.75 a barrel.

The dollar index fell to a one-month low and was last at 100.560, down 1.1 percent. Spot gold was up 0.2 per cent at $1,201 an ounce at 1553 GMT, while United States gold futures were 0.15pc higher at $1,200.90 per ounce.

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