By Gina Lee
Investing.com – Gold was up on Thursday morning in Asia, with the dollar weakening after the U.S. Federal Reserve announced that it would quicken its asset tapering and hike interest rates in its latest policy decision.
Gold futures were up 1.00% to $1,782.15 by 11:25 PM ET (4:25 AM GMT). The dollar, which normally moves inversely to gold, edged down on Thursday.
The yellow metal clawed back up after an initial decline of almost 1% to a two-month low after the Fed handed down its policy decision on Wednesday.
The Fed said in its policy decision meeting on Wednesday that it will accelerate its asset tapering program to $30 billion per month. It also left its interest rate unchanged at 25% but project three quarter-point interest-rate increases in 2022, another three in 2023, and two more in 2024.
In the Fed’s new economic projections, the central bank expects inflation to run at 2.6% in 2022, compared with the 2.2% projected in September 2021.
“The market was looking for a hawkish move from the Fed and they got it in the dot plot,” precious metals trader Tai Wong told Reuters.
“The market is happy that the Fed is a little spooked and doesn't want to be too far behind the curve. For gold, the key technical level is $1,750; a break substantially below that could lead to a rout in the waning days of the year.”
Other investors also remained optimistic.
“The risk that the economy could fall into recession in 2023 does not seem so unreasonable. Gold’s weakness could be near its end as the Fed will be on autopilot until the March policy meeting,” OANDA senior market analyst Edward Moya told Reuters.
Other central banks due to hand down their policy decisions include the European Central Bank, the Bank of England, and the Bank of Japan.
In other precious metals, silver gained 0.6%, while platinum edged down 0.2% and palladium slid 1.3%.