Gold rallies after two-day drop on softer US dollar

Gold prices closed in the green today, April 18, as investors assessed prospects for an upcoming interest rate hike by the Federal Reserve in May.

In an interview with Reuters, St. Louis Fed President James Bullard said the US central bank should continue lifting interest rates until they reach a level deemed “sufficiently restrictive” to curb inflation.

Bullard added that he believes the “bias will be longer” to ensure that inflation is in full control.

This week, markets are closely monitoring statements from Fed officials, ahead of the monetary policy decision scheduled for May 3, amid growing expectations for a 25-basis-point rate hike.

CME FedWatch Tool is pricing in an approximately 90% probability that Fed policymakers will decide on increasing interest rates during the May 2-3 meeting.

There is also a more than 70% chance that the US central bank will keep rates unchanged in June.

In terms of trading, gold for June delivery rose 0.60%, or $12.70, to end at $2,019.70 an ounce, marking the first gain in three sessions.

On the other hand, the US dollar index, which gauges the greenback's strength against a basket of six currencies, retreated 0.30% to 101.76 points at 8:48 pm Makkah time.