Gold Prices Edge Higher after Fed Statement; Silver Prices Rally
Gold prices edged higher in trading on Wednesday after the Federal Reserve announced a fresh round of bond buying program to replace Operation Twist. Silver prices, meanwhile, rose sharply on Wednesday.
Gold rose after the Fed unveiled a new bond buying program under which it will purchase $45 billion in Treasury bonds every month. The program will replace Operation Twist, which expires at the end of this month. The $45 billion per month Treasury bonds purchase will be on top of the $40 billion in mortgage-backed securities the Fed began buying in September.
The Fed also said that it will keep benchmark rates near zero as long as unemployment remains above 6.5%, inflation is not more than 2.5% for the next one to two years, and inflation expectations remains contained.
Speaking to Reuters, Bill O’ Neill, partner at commodities investment firm LOGIC Advisors, said, “That’s a bullish for gold for the Fed to say it will keep interest rates low until unemployment rate drops to 6.5%, it doesn’t look that’s going to happen anytime soon.”
At last check on Wednesday, spot gold was up 0.6% to $1,720.20 an ounce. Gold futures for delivery in February on the Comex division of the New York Mercantile Exchange rose $12.40 to $1,722 an ounce.
Silver prices surged on Wednesday, with spot silver gaining 2.2% to $33.67 an ounce.
In late trading on Wednesday, the iShares Silver Trust (ETF) (NYSE: SLV) was up 1.79% to $32.48, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was up 3.69% to $54.23, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was down 3.80% to $41.25.
Platinum and palladium also edged higher on Wednesday. At last check, spot palladium was trading 0.6% higher at $1,642.49 an ounce, while spot palladium was trading 1.2% higher at $698 an ounce.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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