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Gold Drops After Fed Policy Statement

December 17, 2014 at 21:42 by Vladimir Vyun

Today, the Federal Reserve released its last monetary policy statement for this year. The dollar fell initially but erased losses quickly and is very strong right now. It was not a surprise to see gold fell as a result considering that the metal usually trades with inverse correlation to the US currency. Other precious metals fell as well with the exception of silver.

The Fed changed its language so the mention for interest rates to stay low “for a considerable time” is now applied to the past statements. Coupled with the economic projections that show high likelihood of monetary tightening in 2015, markets interpreted the change as a sign of a close interest rate hike. It is a very unfavorable view for gold that makes the metal unnecessary in its role as a safe haven.

February contract for delivery of gold declined 0.40 percent to $1,189.50 per troy ounce as of 21:35 GMT on COMEX today. March futures for silver advanced 0.27 percent to $15.80 per ounce. Spot price for platinum fell 0.41 percent to $1,193.25 per ounce, and palladium lost 0.45 percent to $778.80 per ounce.

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