Gold’s Safe-Haven Appeal Gets a Polish After Fed Comments

18-Sep (WSJ) — Gold prices jumped following the Federal Reserve’s decision a day ago to hold interest rates steady, as the U.S. central bank’s concern about soft global economic growth burnished the case for investing in safe-haven precious metals.

The gold market closed Thursday before the release of the Fed statement and subsequent news conference by Chairwoman Janet Yellen, so Friday’s settlement was the first to reflect investors’ sentiment in the wake of the U.S. central bank’s decision to stand pat on interest rates. Gold prices posted a large jump upon release of the Fed statement and continued adding to the gains throughout Friday’s session.

Prices for the metal, which have lost more than 7% in the past year and have been bumping along five-year lows, touched their highest level in more than two weeks on Friday, gaining $20.80, or 1.9% to settle at $1,137.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold, viewed as the ultimate risk-averse trade, has been languishing this year amid generally improving economic conditions in the U.S. and more attractive returns until recently in stocks and bonds, which unlike gold yield interest.

But the Fed’s comments on Thursday revived concern about slowing growth around the world and its potential reverberations in the U.S., such as weakened demand for U.S. goods in foreign markets. Stocks and other commodities sold off and the dollar weakened against other currencies, giving gold relief from the doldrums.

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