Gold prices held onto recent gains as the Federal Reserve once again left interest rates unchanged following its latest 2-day meeting.
Once again, the US Federal Reserve has left interest rates unchanged, and gold prices have continued to rise. Though the yellow metal saw a slight dip following the release of the Federal Open Market Committee (FOMC) statement, prices held onto their gains for the day.
As of 2:22 p.m. EST, gold prices were up 0.35 percent for the day to $1,246.49 per ounce. Gold prices gained ahead of the Fed’s 2-day meeting this week, as many investors and market watchers were not expecting a rise in interest rates.
This is the third straight meeting that the Fed has left interest rates the same, which certainly hasn’t hurt the gold price. Overall, the yellow metal is up 16.9 percent year-to-date. “The Fed decision implies that economic growth is weak. A weak economy and the inability to have effective monetary policy creates all sorts of financial risks, risks in the banking system, risks to the economy, and those type of systemic risks are what gold rises on,” Joe Foster of Van Eck Associates told Bloomberg after the Fed’s March meeting.
The US central bank expressed some optimism regarding the US economy this month, but stated that inflation has continued to run below the Committee’s two percent long-term objective. In the near term, the Fed is expecting inflation to stay lower as the effects of an earlier drop in energy prices continue to dissipate throughout the economy.
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” said the Fed in Wednesday’s statement.
The committee maintained a target range of 0.25 to 0.5 percent for the federal funds rate, leaving rates unchanged at 0.5 percent.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.