Gold futures were relatively unfazed on Wednesday after the Federal Reserve left interest rates unchanged and pledged to keep them low for a few more years. While the confirmation was widely anticipated, the broader financial market is reacting favorably to the news. Will investors place all their bets on equities, knowing that they will receive perpetual support for the next couple of years?
December gold futures rose $6.20, or 0.32%, to $1,972.40 per ounce at 18:46 GMT on Wednesday on the COMEX division of the New York Mercantile Exchange. The yellow metal has posted modest gains over the last week, advancing just under 1%.
Silver, the sister commodity to gold, has been seesawing following the completion of the Fed’s
On Wednesday, the Federal Open Market Committee (FOMC) voted to leave the benchmark fed funds rate in the 0% and 0.25% range, which would be the new norm until 2023. The central bank confirmed that it intends to support the economic recovery by allowing inflation to run higher and rates to be lower. Fed Chair Jerome Powell did announce last month a new inflation approach, but the move was officially added to the Eccles Building’s guidance.
With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and
longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.It will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
The Fed also modified its economic projections for the next few years. For the gross domestic product, the central bank is forecasting 4% growth in 2021, 3% in 2022, and 2.5% in 2023. It also predicts the US labor market will return to full employment by 2023, with a jobless rate of 4%.
Powell is calling on Congress to provide additional support during the recovery, and he is urging the public to wear face masks to help the recovery.
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The greenback struggled for direction midweek as the US Dollar index, which measures the buck against a basket of currencies, rose 0.04% to 93.08. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
In other metal markets, October copper futures tacked on $0.0135, or 0.44%, to $3.0765 per pound. October platinum futures fell $9.30, or 0.95%, to $972.90 an ounce. October palladium futures shed $9.50, or 0.39%, to $2,405.00 per ounce.
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