Gold Ends Sharply Higher As Fed Refrains From Early Rate Hike

(RTTNews) - Gold futures moved up sharply for a second straight session to end at a two-week high Thursday, extending strong gains from the previous session after the Federal Reserve said it would not raise interest rates in April.

Citing concerns that U.S. economic growth was moderating due in part to the rapid rise in the dollar, the Fed signaled it would push out any interest rate to at least mid-year.

The Federal Reserve on Wednesday backed away from its pledge to be "patient," which is seen as a strong signal that the central bank will hike interest rates in July or September. The move to remove the phrase came despite concerns over the rapid rise of the U.S. dollar, which touched 12-year highs against the euro earlier this week.

Nonetheless, Fed Chair Janet Yellen said the central bank is not 'impatient' to raise rates and has not decided on the timing of the first rate hike., stressing that it may not be even in June. She indicated the timing to hike rates will be data dependent.

Gold, which started the week at its lowest since November, has been on the rise since yesterday afternoon's Fed announcement.

Gold for April delivery, the most actively traded contract, jumped $17.70 or 1.5 percent to settle at $1,169.00 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for April delivery scaled an intraday high of $1,177.00 and a low of $1,158.60 an ounce.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged up to 749.77 tons on Thursday, from its previous close of 747.98 tons on Wednesday.

On Wednesday, gold ended at $1,151.30 an ounce, up $3.10 or 0.3 percent, ahead of the U.S. Fed Reserve's statement related to its two-day monetary policy meet.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 99.26 on Thursday, up from its previous close of 97.82 on Wednesday in late North American trade. The dollar scaled a high of 99.40 intraday and a low of 97.21.

The euro trended lower against the dollar at $1.0634 on Thursday, as compared to its previous close of $1.0864 in North American trade late Wednesday. The euro scaled a high of $1.0903 intraday and a low of $1.0621.

On the economic front, first-time claims for U.S. unemployment benefits increased slightly in the week ended March 14, a report from the Labor Department said Thursday. The initial jobless claims inched up to 291,000, an increase of 1,000 from the previous week's revised level of 290,000. Economists expected jobless claims to rise to 293,000 from the 289,000 originally reported for the previous week.

Manufacturing activity in the Philadelphia region has increased at a modest pace in March, a report from the Federal Reserve Bank of Philadelphia showed Thursday, although the index of regional manufacturing activity unexpectedly showed a slight decrease. The Philly Fed's diffusion index of current activity edged down to 5.0 in March from 5.2 in February. Economists expected the index to climb to 7.0.

A Conference Board's report on Thursday showed another modest increase by its index of leading U.S. economic indicators in February, continuing to point to short-term growth. The Board's leading economic index edged up by 0.2 percent in February, matching the increase seen in January. The increase was in line with economists' estimates.

Elsewhere, eurozone labor costs growth slowed for the second consecutive quarter in the three months to December 2014, figures from Eurostat revealed Thursday. The nominal hourly labor costs grew a working-day adjusted 1.1 percent year-on-year following 1.4 percent gain in the third quarter. In the three months to June, labor costs had risen 1.5 percent.

U.K. gross mortgage lending declined in February as housing activity remains weak, the Council of Mortgage Lenders reported Thursday. Gross mortgage lending reached GBP 13.4 billion in February, down by around 9 percent from both January and from last year.