Investors parse Fed views on rates with gold higher in early Asia trading
Singapore (Jan 27) Gold was last quoted higher heading into the Asian day on Thursday after the Federal Reserve left few clues about the pace and timing of any future interest rate hikes.
On the Comex division of the New York Mercantile Exchange, gold for February delivery was quoted up 0.40% to $1,124.70 a troy ounce.
Silver for March delivery fell 0.68% to $14.465 a troy ounce, while copper was quoted up 1.06% at $2.059 a pound in early Asia.
Federal Reserve policymakers left interest rate settings unchanged Wednesday as their first Federal Open Market Committee meeting of 2016 ended amidst global financial turmoil and economic anxiety.
The FOMC, which raised the federal funds rate by 25 basis points after seven years near zero Dec. 16, gave no hint of when it might raise that and other short-term interest rates again, although its acknowledgement of threats from "global economic and financial developments" could potentially mean greater delay.
Neither did it give any indication it is backing away from the "gradual" rate normalization strategy announced last month. The vote to keep the funds rate in a target range of 25 to 50 basis points was unanimous.
Overnight, gold inched down on Wednesday remaining near three-month highs in cautious trading ahead of the first monetary policy statement by the Federal Reserve since the U.S. central bank lifted interest rates at a historic meeting last month.
While U.S. job growth has continued to expand at a steady pace over the last three months, long-term inflation, the second leg of the Fed's dual mandate, remains far below its objective. Last month, the U.S. Department of Labor reported that its Consumer Price Index (CPI) for all items declined 0.1%, slightly below forecasts for a flat reading. Meanwhile, the Core Personal Consumption Expenditure (PCE) index, hovered at 1.3% in November, sharply under the Fed's targeted goal of 2%. The Core PCE index, which strips out volatile food and energy prices, is the Fed's preferred gauge of inflation.
Elsewhere, the Shanghai Composite Index fell to fresh 14-month lows at 2,638.30, before closing at 2,735.56, down 14.23 or 0.52%. A session earlier, equities on China's benchmark index plunged nearly 7% amid renewed concerns on the likelihood of further devaluations of the yuan.
China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
Source: Investing.com
