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Gold holds firm after United States Fed rate cut, softer dollar

Gold prices rose more than 1% on Thursday, helped by a retreat in the U.S. dollar, while the Federal Reserve cut rate of interest by a quarter of a percentage point as extensively anticipated.

Spot gold was up 1.2% at $2,691.36 per ounce since 2:22 p.m. EST (1919 GMT), after dropping to a three-week low on Wednesday. U.S. gold futures settled 1.1% greater at $ 2,705.80.

At the end of a two-day policy meeting, the U.S. main bank reduced the benchmark overnight rate of interest to the 4.50% -4.75% range, with policymakers bearing in mind of a job market that has usually eased.

Lower U.S. rate of interest put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.

Gold stays in a strong bull market and no event this week, from the election to today's Fed choice, is likely to modification that, said Tai Wong, an independent metals trader.

Unless Powell leans towards a time out today, gold is most likely to reclaim yesterday's knee-jerk losses, Wong added.

The dollar index was down 0.6% against its competitors after increasing to a four-month high after Republican former President Donald Trump's win in Tuesday's presidential election.

Traders are presently pricing in another 25 basis point cut by the Fed in December, according to LSEG information.

Financiers now look forward to comments from Fed Chair Jerome Powell's interview due at 2:30 p.m. ET for more cues on monetary policy path.

With Trump's upcoming go back to power, any future rate reductions could well be more difficult to attain due to issues that greater costs and stickier inflation force central banks to keep policy restrictive for longer than they would like, independent expert Michael Hewson wrote in a note.

Somewhere else, spot silver rose 1.8% to $31.71 per ounce, platinum gained 0.6% to $992.65 and palladium shed 1.3% to $1,021.25.

(source: Reuters)