Gold Trades Little Changed After Fed Releases Policy StatementDebarati Roy
Gold traded little changed after the Federal Reserve said it will maintain its $85 billion in monthly bond purchases while persistently low inflation could hamper the economic expansion.
“The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. Gold tumbled 22 percent this year as investors lost faith in the metal as a store of value as inflation failed to accelerated even after policy makers printed money on an unprecedented scale.
“The gold market is stuck in the middle because there are so many cross currents,” Tom Power, a senior commodity broker at R.J. market O’Brien & Associates in Chicago, said in a telephone interview. “On one hand maintaining stimulus is positive, but on the other hand deflationary worries can never be good for gold.”
Gold futures for December delivery dropped 0.1 percent to $1,323.80 in electronic trading at 4:17 p.m. on the Comex in New York. Prices settled down 0.9 percent at $1,313 at the close of regular trading.
The precious metal climbed 7.3 percent in July, the biggest gain since January 2012. Fed Chairman Ben S. Bernanke said this month that it’s too early to decide whether to begin scaling back debt purchases in September, after saying on June 19 that bond buying could slow if the economy improves.
The central bank repeated the pledge it has used since September that it will continue the purchases until the U.S. labor market outlook has improved substantially.