NEW YORK (TheStreet) -- Gold prices Wednesday were rising as investors bought the precious metal on the Federal Reserve's promise of low interest rates.
Gold for June delivery was up $7.10 to $1,143.10 an ounce at the Comex division of the New York Mercantile Exchange. Prices Wednesday have traded as high as $1,144.30 and as low as $1,133.30. The U.S. dollar index was adding 0.24% to $81.58. Gold's spot price was rising $8, according to Kitco's gold index, as physical demand out of India increased.
Gold prices were bucking a stronger U.S. dollar and finding support from traders after the Bank of Japan held key interest rates at 0.1% and reassurance from the Federal Reserve that it's more concerned with economic conditions than tightening rates. The news from the Fed's Federal Open Market Committee minutes wasn't enough to pressure the dollar or ramp up inflation fears, but it was enough to provide short-term support for gold prices.
After breaking and holding the $1,130 target area, gold prices are now looking towards $1,150 an ounce. Many analysts believe a move past that number will create momentum buying that could push gold to its high of $1,227. In the meantime, gold is making new highs in euro terms, which is helping spur investment demand.
"We're seeing demand on the physical side from the long early fund buyers and also some strong demand coming out of India," says Will Rind, head of U.S. operations for ETF Securities.
India is the global leader in gold consumption buying over 400 tons in 2009, a 19% decline from 2008. India has previously been in hoarding mode as the price of gold skyrocketed and cash-strapped consumers either bought less expensive gold or none at all. Many analysts are looking for an uptick in Indian consumer demand to be supportive of higher gold prices.
Silver prices were up 20 cents to $18.13 while copper was flat at $3.61. Palladium continued higher, after reaching another all-new high, up over $1 to $510.
Mining stocks, a more leveraged way to invest in gold, were higher as the Dow Jones Industrial Average flirts with 11,000. Barrick Gold(ABX) was rising 1.55% to $40.05 while Newmont Mining(NEM) was up just over 1% to $53.83. Other large- cap miners Kinross Gold(KGC) and Goldcorp(GG) were trading at $17.99 and $38.71, respectively.
