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Update: Gold prices today (Wednesday) took a dive following the U.S. Federal Reserve's afternoon policy statement and press conference.
This morning, spot gold was on track for a third-straight session of gains, at $1,235.80 an ounce as of 12:30 p.m. EDT. But by 3:30 p.m. (after the Fed's announcements), the yellow metal had dropped $6.80 to $1,229 an ounce.
Source: Kitco
On Monday, gold prices hit an eight-month low at $1,225.30 an ounce. U.S. gold futures were flat at $1,236.20.
Here's how the Fed is affecting gold prices today:
- Bad for Gold: The U.S. dollar moved toward a 14-month high today. Last week, the dollar rallied to a six-year high against the yen and a 13-month high against the euro, causing the yellow metal to lose nearly 3% of its value.
- Good for Gold: The Fed re-stated its previous initiative that it'd keep interest rates low for a "considerable time." Interest rates are important for gold investors because low interest rates make gold a more attractive investment. When rates go up, investors typically seek out higher-yielding assets. That the Fed will maintain its near-zero interest rate policy for a while longer supports higher gold prices.
- Bad for Gold, Part 2: Even though the Fed said it will hold interest rates lower for the time being, there's an overall sense that we're moving closer to a policy shift. The Fed saw enough "strength in the broader economy" to cut its quantitative easing program by another $10 billion.
- Quote of the Hour: "The dollar spiked a bit," FuturePath Trading broker and futures analyst Frank Lesh said to Kitco. "Overall, that remains a problem for gold. We're a little closer to rates going higher – not that we know exactly when."
While gold prices today hover around an eight-month low, one factor that may turn the yellow metal around is mounting Asian demand. Here's an in-depth look at historical averages from India and China that indicate a bump for gold prices this fall…
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I lot of people I know who went to college and graduated wish they knew those writers of stocks, bonds, ETF's because the articles they write pays them sometimes and they do not know the future. They should know their free speech is harming many who do not have families entrenched in money and banking. Everyone I ever knew at a bank complained of sell-offs when writers said the prices were going for the bull! The 1% that runs the USA is probably happy at the other 99% that is complaining at lousy article writing that really has no indication… Read more »