Gold prices up in Asia as Fed stays pat, but appears on track to hike
Investing.com – Gold prices gained as markets digested the Federal Reserve’s language for the timing of a now widely expected rate hike this year, with some speculation it could come as late as December or as early as September.
On Wednesday, Federal Reserve policymakers did not raise short-term interest rates from near zero at their Federal Open Market Committee, but their policy statement seemingly left the FOMC on course to raise them before long.
The Fed has kept the overnight federal funds rate, and in turn other rates, near zero since December 2008.
In the statement, the FOMC reaffirmed two conditions for starting to raise rates, that include further labor market improvement and becoming “reasonably confident” inflation will rise to 2% “over the medium term.” And the FOMC’s largely upbeat policy statement suggests the economy is on track to meet those conditions.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded up 0.33% at $1,096.90 a troy ounce.
Silver for September delivery gained 0.32% to $14.790 a troy ounce.
Copper for September delivery rose 0.07% to $2.411 a pound.
Overnight, were relatively flat ahead of the release of the Federal Open Market Committee’s monetary policy statement.
Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in periods of rising interest rates.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
In China, the rallied late to close up 3.4% at 3,789.17, halting a three-day skid. On Monday, Chinese stocks fell by more than 8% experiencing its largest one-day fall since 2007.
China is the world’s largest consumer of and second-largest consumer of gold, behind India.
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