Gold News

Gold Ticks Higher, Stocks Gain & Bonds Fall, on Fed Statement

From Chris Mullen at GoldSeek.com...

Gold fell as much as $5.77 to $939.88 by late trade in Asia on Wednesday, but it then rebounded back near unchanged in London and accelerated its advance in New York before it ultimately ended near its high of $952.05 with a gain of 0.4%.

The Gold Price in Euros remained at €668 as the Dollar weakened, along with US Treasury bonds, on the latest Federal Reserve policy statement.

The FOMC announced no change to their target range of 0.00% to 0.25% for the fed funds rate. They extended their purchases of long-term bonds, but plan to gradually slow their purchases and expect to finish with any purchases by the end of October as they had previously announced.

The Fed expects deflation to remain subdued and see economic activity leveling out with financial market conditions improving. Overall, there was no real change to their statement, as most expected.

Oil rose on renewed economic optimism despite the fact that US crude inventory stockpiles rose a greater than expected 2.5 million barrels on last week's data. Gasoline inventories fell 1 million barrels, and refinery utilization dropped 1% to 83.5%.

The Dow, Nasdaq, and S&P rose over 1% before the Fed's statement and added to those gains at times after the statement on cautious optimism over the future of the economy.

Silver dropped to $14.11 to see a loss of $0.23 in Asia, but it also rallied back higher in London and New York and ended near its high of $14.605 with a gain of 1.53%.

Platinum lost $2 to $1236, and copper gained nearly 9 cents to about $2.82.

Gold Mining and silver equities steadily rose to see nearly 2% gains ahead of the Fed's announcement before they fell back to just under unchanged shortly after. They then rallied back higher into the close and ended with almost 1% gains on the day.

Both the US trade and government deficits widened on the latest data, yawning to $27 billion and $180bn respectively. The decline in home prices accelerated in the second quarter, the National Association of Realtors said.

New mortgage applications fell last week as interest rates for home-buyers rose.

Thursday at 08:30 EST brings Initial US Jobless Claims for last week, expected at 545,000, plus Export and Import Prices for July and Retail Sales for July, expected at 0.7%. Excluding autos, sales are expected up 0.1%.

At 10:00 comes the Business Inventories report for June expected at -0.9%.

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Chris Mullen is chief content manager of the GoldSeek family of websites, a leading source of gold news, comment and mining-stock data for private and institutional investors.

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