Dollar slides, stocks climb as Fed effects linger

Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the USA central bank signalled only gradual rate tightening and the dollar slid to its lowest in five weeks.

The Federal Reserve on Wednesday raised USA interest rates for the second time in three months, as expected, but did not flag any plan to accelerate the pace of monetary tightening as some investors had anticipated.

The greenback weakened broadly after the Fed's policy statement was seen as less hawkish than expected on Wednesday, by sticking to projections of three total rate hikes in 2017 and not four as some traders had hoped for.

On December 14, 2016, the Fed finally raised interest rates by 25 basis points.

A key index of world stocks climbed to record highs while the U.S. dollar sank to a month low yesterday as investors digested the recent USA interest rate increase and indications there would be no pick-up in the pace of monetary tightening.

The euro was down 0.2 percent at $1.0736 after two days of gains against the dollar.

"How much further support the euro can garner would depend on how the Dutch vote could now impact the French presidential elections, for example by eroding support for (Marine) Le Pen".

Chinese stocks slipped 0.6 per cent as investors sought more evidence of a sustainable economic recovery, but indexes were set for a 1 per cent increase for the week. Minutes from the Bank's latest Monetary Policy Committee meeting shocked markets on Thursday by showing one outgoing official voting for a rise in rates, and others on the verge of doing so if inflation gets much higher. Comments from several Fed officials and U.S. economic data in the last few weeks have been supportive of a rate hike.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 100.03, the lowest since February 9.

MSCI's all-country world stock index gained 0.7 percent.

U.S. Treasury yields rose from more than one-week lows on the view that they had fallen too sharply in the prior session after the Fed maintained its outlook for only a gradual pace of interest rate increases this year. Platinum was up 0.8 percent at $939.60 while palladium added 0.2 percent to reach $745.50.

The euro edged lower by 0.05% against the dollar at 1.0727 but was 0.64% lower versus the pound to 0.8674.

The Benchmark 10-year Treasuries were last up 6/32 in price to yield 2.502 percent, from a yield of 2.524 percent late Thursday. Spot gold XAU= was up 1.6 percent at $1,217.81 an ounce by 3:01 p.m. EDT (1901 GMT), after rising to $1,219.36, the highest since March 7.

Gold for April delivery GCJ7, -0.18% fell $2, or 0.2%, to $1,200.60 an ounce.