Gold prices spiked on Wednesday after the Federal Open Market Committee announced it would once again leave interest rates unchanged.
Gold prices spiked following the latest Federal Open Market Committee (FOMC) meeting. The yellow metal was up as much as 0.7 percent after the Fed announced it would once again leave interest rates unchanged.
Gold prices were up 0.62 percent for the day, trading at $1,295.30 per ounce as of 2:31 p.m. EST.
In its statement, the Federal Reserve noted that improvement in the labour market had slowed, though economic growth looks to have picked up. Inflation continues to run below the Committee’s longer-run objective of two percent, due in part to earlier declines in energy prices.
In a note to clients released earlier on Wednesday, Commerzbank predicted that the Fed would likely leave interest rates unchanged. It stated that gold prices are getting a boost from risk aversion in light of fears over a potential Brexit. A lower interest rate is giving the metal support as well.
“The yellow precious metal is clearly in demand as a safe haven at present, as reflected in continuous inflows into the gold ETFs,” Commerzbank stated. “No doubt it is also profiting from the low interest rate environment – yesterday saw yields on ten-year German government bonds dip into negative territory for the first time ever. Yields on ten-year US Treasuries have dropped to a four-month low.”
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.