PRECIOUS-Gold benefits from the easing of the dollar after the Fed meeting

B.and Bharat Gautam

December 16 (Reuters) – Gold rose Thursday, boosted by a decline in the US dollar, after the Federal Reserve decided early next year to end its pandemic-era bond purchases.

Spot gold XAU = rose 0.5% to 1,784.97 an ounce through 0941 GMT while US gold futures GCv1 increased 1.2% to $ 1,786.00.

The Fed on Wednesday paved the way for three rate hikes by the end of 2022 as the economy nears full employment and the US Federal Reserve weather a surge in inflation.

That weighed on the dollar .DXY, which is down around 0.4% versus its competitors, making gold cheaper for holders of other currencies.U.S. DOLLAR/

“The main factor today is the development of the US dollar,” said Ricardo Evangelista, senior analyst at ActivTrades.

Going forward, with the Fed meeting out of the way, the real impact of the Omicron coronavirus variant on economic activity is the big question mark for gold, Evangelista added.

Gold initially eased on Wednesday following the restrictive Fed announcement as reduced incentives and rate hikes add to the opportunity cost of holding gold bars, but gained some ground after the dollar slipped.

The focus is now on the European Central Bank (ECB), which will almost certainly turn back stimulus measures on Thursday while pledging to keep borrowing costs exceptionally low and sticking to its long-held view that the alarmingly high one Decrease in inflation becomes peculiar.

“The expectation (from the ECB) is a weakening of fiscal and monetary stimulus. If this view remains unchanged, it would be reasonable for the price of gold to stay below $ 1,800,” said Michael Langford, director of management consultancy AirGuide.

silver XAG = rose 0.4% to $ 22.15 an ounce. platinum XPT = rose 1% to $ 928.06 and palladium XPD = rose 3.9% to $ 1,659.08.

(Reporting by Bharat Govind Gautam and Asha Sistla in Bengaluru; editing by Amy Caren Daniel)

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