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Kitco July 28, 2016 01:10:36 AM

Gold At Session Highs Following Optimistic Fed Statement

Paul Ploumis
ScrapMonster Author
Gold prices are at session highs in delayed reaction, despite the Federal Reserve acknowledging improving domestic economic growth.

Gold At Session Highs Following Optimistic Fed Statement

(Kitco News) - Gold prices are at session highs in delayed reaction, despite the Federal Reserve acknowledging improving domestic economic growth.

Ahead of the report, gold prices were up about 0.5% on the day. After a brief drop to key support levels, almost 30 minutes following the release of the satement, gold prices were hitting new session highs; August comex gold futures last traded at $1,331.10 an ounce, up almost 1%.

The Federal Reserve left interest rates unchanged in its range between 0.25% and 0.50% following its monetary policy meeting. The central bank said that the labor market has strengthened while economic conditions have strengthened moderately.

However, despite its relatively unchanged economic outlook from the June statement, markets are keying on the slightly optimistic tone as the committee continues to call for a "gradual adjustment" in monetary policy.

"The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen," the statement. "Near-term risks to the economic outlook have diminished," the statement said.

While the Federal Reserve remains concerned about inflation, it expects prices to pick up over the medium term.

Analysts noted that the statement doesn't explicitly put a September rate hike on the table, which could be why gold has managed to hold onto key levels. Some analysts have noted that the Fed had the same stance last year, threatening a September move but ultimately moved in December.

"While subtle changes do suggest some progress towards a rate hike, there's nothing here that points to September, and we're retaining our projection for a hike in December," said Avery Shenfeld, senior economist at CIBC World Markets.

Courtesy: Kitco News

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