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Gold posts further gains in Asia, crosses $1,300 level

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Investing.com - Gold prices gained further in Asia, crossing the $1,300-level, on Thursday after the Fed held steady as expected and markets noted steady policy by the Bank of Japan.

On the Comex division of the New York Mercantile Exchange, gold for August delivery gained 1.21% to $1,303.90 a troy ounce.

Silver futures for July delivery jumped 1.38% to $17.745 a troy ounce. Copper futures for July delivery fell 0.33% to $2.083 a pound.

The Bank of Japan as expected voted to keep the monetary base at ¥80 trillion annually along with negative rates at minus 0.1% on Thursday as it signaled that inflation expectations have weakened.

On Wednesday afternoon, the Federal Open Market (FOMC), as expected, left the target range of its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50%. It marked the fourth consecutive meeting the FOMC held rates steady at their current level since their historic rate hike in December. The FOMC voted unanimously 10-0 to support the monetary policy action. Previously, Kansas City Fed president Esther George served as the lone dissenter at FOMC meetings in March and April.

"The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen," the FOMC said in the statement. "Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further."

The new projections aren't set in stone, but they do indicate how the views of officials are changing. The Fed doesn't see rates going as high as it saw before, and it sees taking a longer time to get to the endpoint officials have in mind.

Markets pushed back expectations for a summer rate hike by the U.S. central bank after a dismal U.S. employment report for May, which showed the slowest rate of jobs growth since September 2010.

Overnight, gold inched down in quiet trade, as investors remained cautious ahead of a closely-watched interest rate decision by the Federal Reserve on Wednesday afternoon.

Elsewhere, analysts at BlackRock said Wednesday that global markets have already priced in "half the move," of a potential Brexit, should voters in the U.K. decide to support a "Leave," campaign in next week's controversial referendum. Also on Wednesday, Hung Tan, executive managing director at the Institute of International Finance (IIF) in Washington D.C., called a Brexit departure a larger threat to the global economy than the collapse of Lehman Brothers in 2008 that helped trigger the Financial Crisis.

"It is not Lehman in the short term in terms of markets being in a panic or chaotic mood, because the central banks will try to pacify that," Tan told Bloomberg Briefs.

"But it is more significant than Lehman in its longer-term impact on global growth. Through trade and investment channels, there will be a downward impact on growth."

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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.

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