Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gaining for the third straight day, gold jumped 1% to close above $1,331 after the Bank of Japan shifted its policy away from quantitate easing, causing the dollar to plunge against the yen. The metal then extended its gains, climbing as high as $1,339 in electronic trade, after the Fed held interest rates unchanged.

Hoping to stimulate its stubbornly stagnant economy, the BOJ abruptly changed direction by adopting new targets long-term interest rates. While it will continue to buy large amounts of government bonds, a money-printing program known as quantitative easing, it will not expand the asset purchases. Rather, the government will seek to generate inflation by holding long-term bond rates near zero for an indefinite period. The yen immediately gained 1% versus the dollar after the announcement.

After the close of the regular Comex session, the Fed announced its decision to hold interest rates unchanged, as expected, but kept the door open to a rate hike in December. Saying risks to the economy now "appear roughly balanced," the committee wants more evidence that employment and inflation are making progress before tightening monetary policy. It was an unusually contested decision with three members dissenting.

The dollar weakened after the Fed decision, supporting gold and other commodities denominated in it for international trade. Equities rallied on the prospect of extended monetary accommodation, with Dow and Global Dow adding 0.5% and 1.1%, respectively.

The other precious metals also finished higher, with silver surging 2.6% while platinum and palladium gained 1.7% and 0.1%, respectively.

At the Comex close: December gold jumped $13.20 to $1,331.40; December silver surged 49 cents to $19.77; October platinum gained $17 to to $1,047.90; and December palladium picked up 40 cents to $683.90 an ounce.