Gold rises above $1,890 after US interest rate hike

Gold prices gained today, May 5, as investors assessed the US Federal Reserve’s decision to raise interest rates and markets cautioned in the run-up to US inflation data.

The US Federal Reserve approved yesterday, May 4, a rare half-percentage-point interest rate increase — the highest increase since 2000, as the regulator seeks to tighten monetary policy to tackle rising inflation.

Addressing a press conference yesterday, Federal Reserve Chairman Jerome Powell ruled out the possibility of a jumbo interest-rate hike of 75 basis points (bps) this year. However, he made it clear that another 50-bp increase in benchmark interest rates will remain on the table during the upcoming meetings.

Meanwhile, investors are awaiting the Bank of England's monetary policy decision later today, amid forecasts are for a rate hike of 25 bps for the fourth consecutive meeting.

All eyes are also on the release of the US jobless claims data for last week, with expectations that the number of applications will remain stationary at 180,000.

Gold futures contracts for June delivery rose 1.2% to $1,892.10 an ounce at 11.11 am Makkah time. Spot price increased by 0.5% to $1,890.70 per ounce.

Elsewhere, silver futures for July delivery also surged by 2.6% to $22.99 an ounce. The spot price of palladium fell 0.3% to $2,252.77, and the spot price of platinum dropped by 0.7% to $987.40.