Gold gains after Fed rate cut, silver hits all-time peak

SEATTLE (Scrap Monster): Gold prices reversed course to rise on Wednesday after the Federal Reserve’s rate cut, though uncertainty over next year’s policy outlook persisted, while silver hit an all-time peak.

Spot gold rose 0.7% at $4,236.57 per ounce at 3:17 p.m. ET (2017 GMT). U.S. gold futures for February delivery settled 0.3% lower at $4,224.70.

The Fed cut interest rates in another divided vote, but signalled it will likely pause further reductions in borrowing costs as officials look for clearer signals about the direction of the job market and inflation.

"Gold traders like the result today, it's trading at day's highs after surviving a bout of profit-taking," said Tai Wong, an independent metals trader.

Lower interest rates raise the appeal of non-yielding assets to investors.

A majority of U.S. central bankers believe they will need to cut short-term interest rates next year, but are widely split over how much. A large group are opposed to any cuts at all, while three pencilled in a rate hike.

Meanwhile, Fed Chair Jerome Powell said the central bank rate policy is well positioned to respond to what lies ahead for the economy, declining to provide further guidance whether another cut lies in the near future.

"Powell has danced around raindrops, coaxing another rate cut from a divided committee with just three dissents, and major markets are rallying through his press conference. It remains unclear if gold can make new highs again," added Wong.

Spot silver rose to a record peak of $61.85. Prices have surged 113% so far this year, supported by rising industrial demand, falling inventories, and its designation as a critical mineral by the U.S.

"In our view, the outperformance from silver reflects speculative money flowing into a more levered play following gold’s pullback," analysts at SP Angel wrote in a note.

"Alongside speculative flows, silver is benefiting from a tight physical market, having seen a supply squeeze in October."

Platinum dropped 2.4% to $1,654.55, while palladium lost 2% to $1,475.94.

Courtesy: www.reuters.com