Gold Price Jumps After Fed Scales Back Forecasts for Interest Rates

New York (Mar 16)  Gold snapped a three-day losing streak after Federal Reserve officials held off from raising borrowing costs and scaled back forecasts for how high interest rates will rise this year.

The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent, the central bank said in a statement Wednesday following a two-day meeting in Washington. The median of policy makers’ updated quarterly projections saw the rate at 0.875 percent at the end of 2016, implying two quarter-point increases this year, down from four forecast in December.

Gold has advanced this year as turmoil in financial markets and the outlook for slower global economic growth boosted demand for the metal as a store of value. With reports signaling improvement in the U.S. economy, odds of tighter monetary policy increased this month, according to Fed-fund futures. Higher rates tend to curb the appeal of gold because the metal doesn’t pay interest like other assets.

Gold for immediate delivery rose 0.8 percent to $1,242.07 an ounce at 2:04 p.m. in New York.

By 2:30pm EST spot gold was up $24 to $1256, while spot silver surged more than 2% to $15.63.  Platinum rocked $18 to $981 as palladium surged $14 to $581 on increased volume.

Source: Bloomberg