Spot Gold Advances as Fed Holds Rates Steady, Assesses InflationBy
Fed says it’s ‘monitoring inflation developments closely’
Statement highlighted that period of weak inflation continues
Spot gold touched a session high after the Federal Reserve left its benchmark policy rate unchanged and said it’s “monitoring inflation developments closely.”
“Near-term risks to the economic outlook appear roughly balanced,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. The statement highlighted that a period of weak inflation continues. “On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent.”
Fed fund futures are pricing in a 39 chance of an interest rate increase by year-end, down from 45 percent before the Fed’s statement. Gold has been little changed this month as traders await clues from the central bank on the course of monetary policy.
“The gold price is firmly in the green territory as traders believe that the Fed is not going to increase the interest rate,” Naeem Aslam, chief market analyst at Think Markets U.K. Ltd., said in an email. “The main reason is that inflation is so low.”
Bullion for immediate delivery rose 0.5 percent to $1,256.19 an ounce at 2:27 p.m. New York time.