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(Kitco News) – The gold market continues to stay close to all-time highs and with some buying momentum lagging, the Federal Reserve maintains a steady course to stabilize the economy devastated by the COVID-19 pandemic.
As expected, the United States central bank kept interest rates in the zero limit range and provided little new guidance on monetary policy.
“General financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to American households and businesses,” the central bank said in its monetary policy statement. “The path of the economy will depend significantly on the course of the virus.”
August gold futures last traded at $ 1,951.10 an ounce, up 0.33% on the day.
The Federal Reserve also reiterated its position that interest rates will not change for the foreseeable future.
“The Committee hopes to maintain this target range until it is confident that the economy has withstood recent events and is on track to meet its maximum employment and price stability targets,” the statement said.
Although gold prices have risen to session highs following the release of the Fed statement, analysts have noted that the market reaction has been limited as the Federal Reserve statement fell short of expectations.
“There were two risks to the decision: 1) that the Fed would launch or hint at something new in terms of programs / policy 2) that would say something negative about the economy. Neither happened, and the markets are generally indifferent, ”said Adam Button, chief market strategist at Forexlive.com.
Katherine Judge, a senior economist at CIBC, said the US central bank may be waiting for more information before they commission to announce new announcements.
“They appear to have chosen to wait for the September meeting, when the next set of forecasts is expected, to provide more concrete guidance on future rate increases perhaps by linking them to the outcome of a macro variable,” he said. “The second quarter GDP report on Thursday will provide a starting point to assess the scale of the output gap.”
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