Gold Touches $1098 on Fed's "Zero Stays" Decision

From Chris Mullen at GoldSeek.com...

Gold saw slight losses in Asia on Wednesday and then rose almost 1% to reach as high as $1095.25 by early trade in London.

The Gold Price then pulled back under $1090 around 08:00 EST and rose to a new all-time high of $1095.42 an ounce a little before noon.

Gold fell back off in the last couple of hours of trade, but ended with a new closing record, up 0.2%.

The Dollar Gold Price then shot to a new trading record of $1098 an ounce in after-hours access trade, shortly after the Federal Reserve said it will keep US rates at zero for an extended period.

The Gold Price in Euros touched an 8-month high above €741 before slipping back to close at €732.

Silver followed a similar pattern to gold and ended over 1% off its session high of $17.60 with a gain of 1.0%.

Platinum gained $6 to $1358.50, and copper gained a few cents to about $2.98.

Gold Mining and silver equities rose over 2% in the first hour of trade before they fell to see slight losses by mid-afternoon and then climbed back near their earlier highs after the Federal Reserve's latest monetary policy statement was released.

The miners then fell back off in late trade – along with the major indices – and cut their gains to less than 1%.

The Federal Reserve voted to keep its key fed funds rate in a target range of 0.00% to 0.25%, as expected. The US central bank also said it believes inflation remains subdued and that it will keep rates exceptionally low for an extended period.

Some analysts were looking for a change in their language, but it appears that there will not be a change any time soon. On the data front Wednesday, last month's ISM Services Index came in weaker than expected – and weaker from Sept. – while the private-sector ADP payroll report showed 203,000 nationwide job losses, just ahead of expectations.

Oil added to early gains after the Energy Information Administration announced that US crude inventories surprisingly fell 4 million barrels last week, gasoline inventories fell 300,000 barrels, and distillates fell 400,000 barrels.

The US Dollar index and Treasuries fell in early trade on expectations that the fed would hold rates in their record low range. Both then fell to new session lows after the Fed confirmed they won’t be raising rates anytime in the near future, but two-year yields fell while 10-year and 30-year yields rose, so the yield curve steepened overall.

The Dow, Nasdaq, and S&P rose roughly 1% in the first hour of trade on decent economic data and expectations for continued low rates, but they cut into their gains by midday.

All three indices eventually climbed back to their earlier highs or better, but fell back off in the last hour of trade and ended near unchanged.

Thursday at 08:30 EST brings third-quarter US Productivity – expected 6.5% higher – and Initial Jobless Claims for last week, expected at 520,000.

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