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Gold Prices Surge After Fed Decision, Reaching $1,128.10

Strategic Insights

— 1 min read

Gold futures surged higher after the Federal Reserve left interest rates unchanged, with most-actively traded April gold settling at $1,122.50 an ounce, a 1.5% gain. The metal saw further gains in electronic after-hours trading, reaching $1,125.80, as market participants positioned themselves bullishly ahead of the announcement. Analysts attributed the gains to the continuation of accommodative monetary policy, which has helped gold prices at the expense of the U.S. dollar.

Key Takeaways:

  • Gold prices surged 1.5% to settle at $1,122.50 an ounce after the Fed decision.
  • Most-actively traded April gold gained $17.10, and thinly traded nearby March gold rose $17.10, or 1.5%, to $1,122.20.
  • Market participants put bullish orders in ahead of the Fed's announcement, with some analysts attributing this to front running.
  • Housing data showed a 5.9% decrease in new housing starts, which helped expectations that the Fed will stay on the accommodative side, supporting gold and keeping the dollar under pressure.
  • Analysts noted that gold is assuming its role as the ultimate currency, with investors preferring not to hold any currencies due to perceived threats to sovereign debt.
  • The metal ended its previous session slightly higher despite a stronger dollar, and continued to gain in the euro.

Statistics:

  • Gold prices surged 1.5% to settle at $1,122.50 an ounce.
  • Market participants put in bullish orders ahead of the Fed's announcement, with Comex April gold gaining $17.10.
  • Housing data showed a 5.9% decrease in new housing starts.
  • The ICE Futures U.S. Dollar Index fell 0.364 point, or 0.5%, after the Fed decision.
  • Gold has been trading against the perceived safety of the greenback as a risk play, with ultra-low interest rates encouraging investment in assets like commodities and equities.

Sources:

  • Dow Jones Commodities News via Comtex (Mar 16, 2010)
  • Dow Jones Newswires (Matt Whittaker, 212-416-2139, matt.whittaker@dowjones.com)
  • ApexFutures.com (Craig Ross, vice president)
  • FuturePath Trading (Frank Lesh, broker and futures analyst)
  • Country Hedging (Sterling Smith, analyst)
  • Olympus Futures (Charles Nedoss, senior market strategist)
  • LOGIC Advisors (Bill O'Neill, principal)

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