IV:Gold surges on news Fed to stick with monetary easing program
Investing.com - Gold prices skyrocketed on Thursday, one day after the Federal Reserve announced it would continue to stimulate the U.S. economy with its USD85 billion monthly bond-buying program.
Ultra-loose monetary policies that include asset purchases drive down interest rates to spur recovery, weakening the dollar in the process and making gold an attractive hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,366.50 during U.S. afternoon hours, up 4.50%.
Gold prices hit a session low of USD1,358.70 a troy ounce and high of USD1,375.10 a troy ounce.
Gold futures were likely to find support at USD1,291.70 a troy ounce, Wednesday's low, and resistance at USD1,393.80, the high from Sept. 8.
The December contract settled down 0.14% at USD1,307.60 a troy ounce on Wednesday.
The Federal Reserve on Wednesday concluded a two-day monetary policy meeting and made no changes to its USD85 billion bond-buying program, much to the surprise of many.
Many market participants were expecting the U.S. central bank to trim the total by USD10 billion or more now that the economy is gaining steam, though the Fed said it wanted to see more evidence that recovery will be sustained before adjusting the pace of its purchases.
Currently, the Fed buys USD40 billion a month in mortgage-backed securities and USD45 billion in longer-term Treasury securities.
The Fed's announcement sent the dollar falling and gold surging.
Investors largely ignored U.S. data.
The Federal Reserve Bank of Philadelphia said its Philly Fed manufacturing index rose to a 30-month high of 22.3 in September from 9.3 in August, blowing past expectations for an increase to 10.0.
Industry data revealed that U.S. existing home sales rose 1.7% to 5.48 million units last month, from 5.39 million in July. Analysts were expecting existing home sales to fall 2.6% to 5.25 million in August.
Also on Thursday, the Department of Labor reported that the number of individuals filing for initial jobless claims in the U.S. rose by 15,000 to a seasonally adjusted 309,000 in the week ending Sept. 14, from an upwardly revised 294,000 the previous week.
Analysts were expecting the number to rise by 36,000 to 330,000 last week.
Elsewhere on the Comex, silver for December delivery was up 7.82% at USD23.250 a troy ounce, while copper for December delivery was up 1.92% and trading at USD3.342 a pound.
