Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.1% to close under $1,950 as traders, disappointed that the Federal Reserve did not unveil deeper easing measures, took profits from the metal's three-day winning streak.

Following its two-meeting on monetary policy, the Fed published a statement yesterday that, as expected, leaned into its new framework of inflation averaging. Rather than raising rates to prevent inflation from exceeding its target 2%, the central bank will now allow inflation to run hotter than 2% for as long it had been under the target.

In addition, the Fed emphasized that interest rates will remain near zero at least until the end of 2023.

Both policy positions are extremely dovish in themselves and bullish for gold in the longer term. Low interest rates undercut the dollar by shifting yield differentials in favor of competing currencies, which supports gold and other commodities by making them less expensive overseas.

In addition, near zero rates ensure that inflation-adjust bond yields will be negative for years to come, eliminating the opportunity cost for holding gold rather than bonds. And finally, gold is a traditional go-to asset for investors seeking to hedge against rising inflation.

But the Fed's statement nonetheless disappointed gold traders who were speculating that the Fed would unveil even deeper easing measures to support recovery from the COVID recession. With inflation averaging and low interest rates already priced into the market, traders took profits from gold's three session rise despite a lower dollar and falling bond yields, which typically support the metal.

The other precious metals were also lower, with silver dropping 1.4% while platinum and palladium lost 4.4% and 3.4%, respectively.

At the Comex close: December gold dropped $20.60 to $1,949.90; December silver fell 38 cents to $27.10; October platinum shed $42.60 to $930.90; and December palladium lost $82.30 to $2,335.30 an ounce.