The major mover against the dollar, however, was the Norwegian crown, which rose more than 2 percent after Norway’s central bank left its main interest rate unchanged and suggested further rate cuts may not be needed because of a pickup in the economy.
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Bullion rallied 1.7 per cent on Wednesday after the Fed stayed pat on rates but indicated it could still tighten monetary policy in the world’s biggest economy by the end of the year.
Oil prices rose for the second straight day thanks in part to a surprisingly large drop in USA crude inventories, pushing oil-linked currencies like the Canadian dollar, Colombian peso and Russian rouble higher. Traders now see more than 50% chance that the Fed will raise rates at its policy meeting in December, according to the CME Group’s FedWatch tool.
Higher interest rates make currencies more attractive to investors. Before that also comes the uncertainty of US elections, added GAM’s Hatheway.
The dollar fell to its lowest in a week against a basket of major currencies as investors sold the greenback following the Fed’s reduction of longer-term interest rate expectations.
Gold has firmed over recent sessions as currencies have seen choppy trade, including a weaker dollar, despite the Bank of Japan’s aggressive steps to fight deflation announced earlier Wednesday. There have now been nearly 200 cuts worldwide since the start of past year.
Oil climbed after a surprisingly large drop in United States crude inventories emboldened investors ahead of next week’s meeting between Opec members and Russian Federation to discuss supply.
U.S. gold futures settled up 1 per cent at US$1,344.70.
USA crude (WTI) futures advanced 1 percent to $45.83 after soaring 2.9 percent on Wednesday.
Industrial metals surged too, along with emerging market assets, on the hope that low global interest rates will boost both growth and demand for resources.
“This is a follow on from what happened yesterday with the Fed being more dovish, the market is now going through the upside in gold prices”, said ABN AMRO commodity strategist Georgette Boele, adding that gains may be capped around US$1,350.
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The U.S. session will see weekly jobless claims and monthly house price figures published, with euro zone consumer confidence data set to show how shopper confidence there is holding up due at 1400 GMT.
