By Myra P. Saefong and Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) — Gold futures soared to new heights above $1,290 an ounce on Wednesday after the U.S. Federal Reserve said it’s prepared to take further measures to support the recovery and stave off deflation.
Gold for December delivery (GCZ10 1,295, +20.40, +1.60%) hit an intraday high of $1,295.80 an ounce in electronic trading on Globex.
The contract recently gained $16.50, or 1.3%, to $1,290.80 an ounce.
Godl had traded around $1,273 an ounce on Globex before the Fed’s announcement in Washington on Tuesday afternoon.
During the regular trading session in New York Tuesday, December gold fell $6.50, or 0.5%, to close $1,274.30 an ounce. That was gold’s first down day in four. Gold on Monday had hit a fresh record, settling at $1,280.80 an ounce. See Tuesday’s Metals Stocks column.
Darin Newsom, senior commodities analyst at Telvent DTN, said that the Fed’s concern over the slower pace of the economic recovery has boosted safe-haven demand for gold.
After regular trading closed, the Fed signalled it would be willing to take additional steps to boost faltering U.S. economic recovery. See story on Fed concern over deflation.
Overall, ”the FOMC continued to fan the expectation that the Fed is going to unleash QE v.2 [quantitative easing version 2], which will include the purchasing of Treasurys via fresh balance-sheet expansion,” said Ed Bugos, senior mining analyst at Strategic Energy Research and Capital.
“If anyone was uncertain about the Fed moving to inflation targets as a policy tool, it looks pretty certain now,” he said. “This is clearly an interventionist Fed, which is all bullish for gold.”
In the currency markets, the dollar fell against its major rivals, and European equities posted steep losses.
