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Gold maintains rally after FOMC decision
By icn.com
Gold prices hit one-week highs on Thursday after the Federal Reserve shocked markets by choosing not to cut back on its asset-buying program for the time being, knocking the dollar to a seven-month low against a currency basket.
On Wednesday, gold remained in a slump, settling down fractionally at $1,307.60 an ounce before catching fire in electronic trading thanks to the Fed’s announcement to maintain the pace of its bond buying program.
Bullion gained 4.2 percent on Wednesday, its biggest daily gain since June 2012, after Fed Chairman Ben Bernanke refused to commit to curbing quantitative easing this year.
Many economists had expected a $10 billion reduction in the central bank`s $85 billion monthly bond purchases, part of a package of monetary easing measures that have driven a sharp rally in gold in recent years.
Spot gold hit its highest since Sept 10 at $1,375.03, before steadying to $1,367.70 an ounce by 12:18 p.m. ET.
Gold, often seen as an inflation hedge and safe-haven investment, has lost some 20 percent of its value this year after the Fed signalled it would start reining in QE, which could indicate the end to ultra-loose monetary policy.
The Dollar index, which tracks the performance of the U.S. dollar against a basket of other major currencies, traded around the lowest levels since mid-February at 80.48. The index hit 81.38 before the Fed announcement Wednesday.
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