Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged down less than 0.1% to close the regular session under $1,721 as traders treaded water ahead of the Fed's post-meeting statement on monetary policy. The metal then surged 1.5% to more than $1,749 in electronic trade after the central bank signaled no rate hikes until 2023.

The Federal Reserve delivered a surprisingly dovish statement, pledging to use its "full range of tools" to lift the economy back to full recovery from the COVID-19 recession. Interest rates will remain at near zero at least through 2022, according to the policy statement, and quantitative easing (QE) will continue unabated.

The markets were uncertain whether the last week's surprisingly strong jobs report would nudge the committee in the direction of reducing monetary stimulus. All doubts were put to rest. Fed Chair Jerome Powell told reporters "it's a long road" to full recovery and the central bank is "not even thinking about raising rates."

Near-zero interest rates and QE are bullish for gold. Low rates pressure bond yields, reducing the opportunity cost for the metal, which provides no yield of its own. Tantamount to printing money, QE floods the financial system with cheap dollars, debasing the currency and increasing the risk of long-term inflation.

The other precious metals finished mostly lower before rising after the Fed statement. Silver ended near flat, then jumped 3%. Platinum fell 1.7% before retracing its losses. Palladium lost 1.9% before trimming that loss to 0.6% after the Fed.

At the Comex close: August gold edged down $1.20 to $1,720.70; July silver was flat at $17.79; July platinum dropped $14.60 to $846; and September palladium fell $36.30 to $1,930.80 an ounce.