Gold prices remain in positive territory after the Federal Reserve decided the US economy was strong enough to continued the reduction in monthly asset purchases to $35 billion, but the FOMC minutes statement relayed a continued dovishness as the central bank has decided to keep the short-term interest rates near zero.
The decision to keep rates near zero is a positive for gold, and the decline to the current Fed funds rate post-financial crisis is what initially sparked demand in the yellow metal. Low interest rates signals to market participants that economic growth is not there, and experimental monetary policy must remain at the forefront.
Traders understand the dovish stance of the Fed, but they do not know how or when the central bank will determine when the economy is fit enough for higher interest rates. The Fed chairwomen Janet Yellen is less open than her predecessor, Ben Bernanke. The lack of communication in policies will likely keep precious metals supported. “People want more details on what the Fed plans to do with interest rates,” said Anthem Blanchard, chief executive officer at Blanchard Vault.
Gold futures were higher by $2.90 to $1,274.90 per ounce, while silver was up $.108 to $19.84 per ounce at the close of the US trading session.