Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold jumped 2.9% to close at $1,265 after the Federal Reserve reduced its forecast for the number of rate hikes this year, driving the dollar lower and building demand for alternative stores of value.

At yesterday's conclusion of its two-day meeting on monetary policy, the Fed held interest rates unchanged, as expected, but surprised the markets by signaling its intention to raise rates by half as much this year as it had previously intended.

At its December meeting, the central bank increased rates by a quarter-percent for the first hike in nine years. It also forecasted four more hikes of the same amount to come in 2016. In a dovish shift, the Fed is forecasting just two such hikes this year, rather than four, citing weaker global economies and financial conditions as reasons to be cautious about tightening.

Gold promptly rallied 2.5% in electronic trade after the announcement as the dollar plunged. Today, the metal built on those gains, adding another 0.4% in Comex trading, while the dollar extended its losses by 1%. A weaker dollar supports higher prices for gold and other commodities priced in it for international trade by making them less expensive overseas.

Oil rallied strongly in response to the weaker dollar, the WTI crude surging 4% to 2016 highs to briefly eclipse psychologically-important $40 barrier. Rising energy and material shares boosted equities, with the Dow gaining 1% and the Global Dow 2%.

The other precious metals also finished strongly higher, with silver spiking 5.1% while platinum and palladium gained 2.9% each.

At the Comex close: April delivery jumped $35.20 to $1,265; May silver spiked up 43 cents to $16; April platinum gained $27.30 to $986; and June palladium added $17.20, to $594.70 an ounce.