Gold Falls After Fed Pledges To Keep Rates Low
The Federal Reserve did not change much in its statement about raising interest rates, which caused gold to fall imediately upon Janet Yellen’s remarks. Before that juncture, gold had been flat.
The Fed hinted that rates will remain near zero for a “considerable time” in its statement, a move investors see as being positive for gold.
“This is a reprieve for gold, in the near term,” said George Gero, senior vice president of RBC Capital Markets Global Futures.
Fed’s announcement doesn’t do anything to alter the trajectory of US monetary policy, which is on the path to tightening liquidity and raising interest rates.
“Delaying something a month or two is different than what was happening in the past, when we were talking about further (stimulus),” Klopfenstein said.
Officials pledged they would keep borrowing costs near zero percent for a “considerable time,” replacing it with a promise to be “patient,” according to a statement at the conclusion of a two-day meeting today.
“The precious-metals market is reading it as negative news,” according to Chris Gaffney, the senior market strategist at EverBank Wealth Management. “The Fed has changed its language, but is still on course to raise rates.”
Gold reached a four-year low as signs of a tighter US money supply drove the dollar multi-year highs.
Fading in memory for many investors is the fact that bullion increased 70 percent from December 2008 to June 2011 as central banks embarked upon quantitative easing. Gold fell 28 percent in 2013, the biggest drop in three decades.