Tags: fed | metals | miners | gold bulls

Fed's Inaction Revives Gold Bulls, Propels Metals and Miners

Image: Fed's Inaction Revives Gold Bulls, Propels Metals and Miners

(Dollar Photo Club)

Thursday, 22 Sep 2016 11:53 AM

The Federal Reserve’s inaction has again revived gold bulls, and industrial metals and miners are getting a ride as well.

Gold rose to the highest in two weeks after policy makers kept U.S. interest rates unchanged for a sixth straight meeting and cut their outlook for rate increases next year. The dollar slipped for a third time this week, making metals cheaper for holders of other currencies. Mining sharesadvanced.

Low rates and efforts by central banks to bolster economic stimulus are driving demand for gold as a store of value. Bullion is headed for a third quarterly gain, the longest rally since 2011, when prices surged to a record. While traders are placing odds of a Fed move in December at 60 percent, up from 12 percent in early July, such a move is already “baked into the gold price,” Mariann Montagne, an analyst at Gradient Investments, said Wednesday.

“Markets took the Fed rate decision as though it was unexpected, telling us that there was considerable nervousness about the possibility of a surprise going into the move,” Edward Meir, an analyst at INTL FCStone in New York, said in a note.

Gold futures for December delivery advanced 0.9 percent to $1,342.90 an ounce at 10:12 a.m. on the Comex in New York, after reaching $1,344.60, the highest since Sept. 8. Prices are up 1.7 percent this quarter.

Dot Plot

The Fed on Wednesday opted to wait for more evidence of progress toward its goals. The central bank’s so-called “dot plot,” which it uses to signal its outlook for the path of interest rates, showed that officials expected one quarter-point rate increase this year. Policy makers see two rate hikes next year, down from their June median projection of three.

Copper futures for December delivery climbed 1.7 percent to $2.1915 a pound on the Comex, after reaching $2.1965, the highest since Aug. 18.

In London, the FTSE 350 Mining Index climbed to the highest in 14 months, as Glencore Plc and BHP Billiton Plc soared. A gauge of 14 gold producers tracked by Bloomberg Intelligence headed for the biggest two-day gain in two months.

 

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The Federal Reserve's inaction has again revived gold bulls, and industrial metals and miners are getting a ride as well.
fed, metals, miners, gold bulls
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2016-53-22
Thursday, 22 Sep 2016 11:53 AM
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