Gold futures hover below record high on Fed rates pledge

Shutterstock photo

Forexpros - Gold futures were up for a fourth day on Wednesday, hovering below the previous session's record high after the Federal Reserve pledged to keep rates at ultra-low levels "at least" through mid-2013.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,762.05 a troy ounce during early European trade, jumping 1.43%.

It earlier rose as much as 1.75% to trade at a daily high of USD1,768.05 a troy ounce, hovering below Tuesday's record high of USD1,780.85 a troy ounce.

Gold prices have climbed to record highs in five of the past seven sessions.

The Federal Reserve pledged on Tuesday to keep its benchmark interest rate at an all-time low, adding that it will maintain a loose monetary policy until "at least through mid-2013."

In a statement, the Fed said growth was much slower than expected and the labor market had deteriorated, underlining concerns over the U.S. economic outlook.

"The FOMC now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually" from the July level of 9.1%, the statement said.

"Moreover, downside risks to the economic outlook have increased," the statement added.

The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".

The statement fueled speculation the central bank may embark on a third round of quantitative easing, after the second round of bond purchases concluded at the end of June.

Minutes of the Fed's meeting will be published on August 30 and will provide more insight into the policy debate, while Fed Chief Ben Bernanke is to speak at the central bank's annual policy retreat in Jackson Hole, Wyoming on August 26.

Bank of America-Merrill Lynch raised its 12-month gold price forecast to USD2,000 an ounce, citing concerns over sovereign debt levels in the U.S. and the euro zone and weakening global growth.

Elsewhere on the Comex, silver for September surged 1.85% to trade at USD38.36 a troy ounce, while copper for September delivery shed 0.45% to trade USD4.023 a pound.

Forex News

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.