$1,300 may be ‘new floor’ for gold next week: analyst
by Myra P. Saefong, Market Watch:
Did the Federal Reserve clear the way for a push higher by gold?
Fed officials left interest rates unchanged Wednesday and cut their expectations for rate hikes in the next two years, brightening the outlook for gold and prompting prices to tap a high of $1,300 an ounce in electronic trading.
Futures prices GCQ6, -0.42% hadn’t traded above the key $1,300 level on an intraday basis since early May, and haven’t settled above that level since late January 2015, according to FactSet data. After settling at $1,288.30 an ounce on Wednesday to log a six-straight session climb, the August contract continued to march higher to sit comfortably above the $1,300 on Thursday. In early trade, gold was up 1.6% at $1,308.80 an ounce.
The Federal Open Market Committee’s “move to lower their long-term rate forecasts more in line with the market’s expectations highlights a clear road higher for gold,” said Brien Lundin, editor of Gold Newsletter. “With so much of the world now operating in a negative-rate environment, and now the path to higher rates in the U.S. being moderated, the outlook for gold is very bright.”
The Fed on Wednesday held interest rates steady and expects to raise rates twice in 2016. But the central bank trimmed expectations for rate hikes and now sees only three rate hikes in 2017 and 2018, down from a projection of four in both years.
“Everything about this decision is dovish,” said Chris Gaffney, president of EverBank World Market.
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