Morning Gold: Gold Stable as Stronger Dollar After Fed’s Meeting

U.S. Federal Reserve

(Reuters) – On Thursday, gold stabilized as traders continued to be wary of the outlook for U.S. monetary policy even after the Federal Reserve didn’t give any signs that it is set to taper or reduce its stimulus program, and as the dollar improved from six-week lows.

At the end of a the two-day meeting on Wednesday, the Fed said that it would maintain its $85 billion monthly bond-buying measures, part of its quantitative easing program and a main pusher of higher gold prices, in an effort of a stronger U.S. economy.

That instantly knocked the dollar to a six-week low against other major currencies and lifted gold. Though, the U.S. unit recovered and gold moved back as traders digested the statement.

Spot gold was leveled at $1,323.39 an ounce at 1215 GMT, hitting a high of $1,333.46 immediately after of Wednesday’s Fed statement. December U.S. gold futures for delivery increased $10.50 an ounce to reach $1,323.50.

Mitsui Precious Metals analyst David Jollie stated “The expectations of tapering and the forthcoming end of quantitative easing program are a little premature, but unless the U.S. economy weakens substantially, you can still expect quantitative easing program to come to an end at some point,” Jollie added also “The next move will most likely come from outside the gold market; from dollar weakness or strength,”

New York’s SPDR Gold Shares, the world’s largest gold-backed exchange-traded fund, holdings were not changed for a fifth day on Wednesday, the fund said.

Commerzbank noted “On balance, no more gold has been withdrawn from the exchange-traded funds in the past six days of trading,” also added “If the ETF outflows were to come to an end, one key factor weighing on the gold price would be eliminated.”

The bullion physical demand stayed quiet. Gold futures of Shanghai curved down after gaining at the open, indicating China’s soft buying, the world’s second-biggest bullion consumer.