Gold Jumps to 1-Week High Erases Early Losses As Dollar Slides On BOJ

Gold Jumps to 1-Week High Erases Early Losses As Dollar Slides On BOJ

Prices of gold futures rose to a one week erased early losses in European trade on Thursday, as the United States dollar dropped by 2 percent against the yen versus the yen after the BOJ shocked markets by maintaining a stable monetary policy.

Gold for June delivery on the Comex division of the New York inched up $6.25, or 0.5%, to trade at $1,256.65 a troy ounce.

Spot gold had ticked up 0.1 per cent to $1,247.40 an ounce, after dropping 0.7 per cent earlier in the session.

The US dollar index, which measures the strength of the greenback versus a trade-weighted basket of six major currencies, slipped to 93.79 in early trading, a level not seen since last April 12 amounted to 93 , 81, below the 0.6% for the day.

The greenback was down nearly 3% against the yen at 108.41 after the Bank of Japan kept monetary policy steady, quashing speculation that it might raise their already comprehensive program of easing.

The dollar was already on the defensive after the Federal Reserve left interest rates without change after its two-day meeting on Wednesday and issued a press release implying that it was in no hurry to raise rates.

It offers little hope of a movement in June, the US Federal Reserve said “economic conditions are going to evolve in a manner that will justify only gradual increases in the federal funds rate.”

Market observers expect two further rate hikes this year, but dated futures prices show traders do not expect an increase at least until September, according to the CME Group (NASDAQ: CME) Fedwatch tool.

With the FOMC meeting off the path, attention data US economic growth due later in the session now moves to the first quarter on expectations for a 0.7% expansion.

At the Multi Commodity Exchange, gold for delivery in June eased by Rs 93, or 0.32%, to Rs 29,290 per 10 gram after participants trimmed positions at current levels even as the precious metal rose overseas.

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