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Gold Settles Modestly Higher Ahead Of Fed Rate Decision

Gold Settles Modestly Higher Ahead Of Fed Rate Decision
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Gold futures settled modestly higher on Wednesday, extending gains to a third successive session. However, prices edged lower after the Federal Reserve cut interest rate by 25 basis points.

A fairly steady dollar limited gold’s uptick. The dollar index, which was trading marginally above the flat line for much of the session till the Fed announced its rate decision, rose notably higher after that, advancing to 98.69.

Gold futures for December ended up $2.40, or 0.2%, at $1,515.80 an ounce, after having advanced to $1,519.50 a little before noon.

On Tuesday, gold futures for December settled with a gain of $1.90, or about 0.1%, at $1,513.40 an ounce.

Silver futures for December ended down $0.221, at $17.919 an ounce, while Copper futures for December settled at $2.6130 per pound, down $0.0140 from previous close.

Data released by the Labor Department Wednesday morning showed new residential construction in the U.S. showed a substantial rebound in the month of August. The report said housing starts soared by 12.3% to an annual rate of 1.364 million in August after slumping by 1.5% to a revised rate of 1.215 million in July.

Economists had expected housing starts to surge up by 5% to a rate of 1.250 million from the 1.191 million originally reported for the previous month.

The Commerce Department said building permits also spiked by 7.7% to an annual rate of 1.419 million in August after jumping by 6.9% to a revised rate of 1.317 million in July.

Building permits, an indicator of future housing demand, had been expected to drop by 2.7% to a rate of 1.300 million from the 1.336 million originally reported for the previous month.

The Federal Reserve cut rates by 25 basis points as widely expected, lowering the target range for the federal funds rate to 1-3/4 to 2%.

The Fed attributed the cut to the implications of global developments for the economic outlook as well as muted inflation pressures.

The much anticipated accompanying statement was largely unchanged from July, with the Fed reiterating that the labor market remains strong and that economic activity has been rising at a moderate rate.

The central bank reiterated that it will act as appropriate to sustain the economic expansion, with a strong labor market and inflation near its symmetric 2% objective.

Shortly after the announcement, U.S. President Donald Trump tweeted, “Jay Powell and the Federal Reserve Fail Again. No ‘guts,’ no sense, no vision! A terrible communicator!”

The material has been provided by InstaForex Company – www.instaforex.com