Investing.com - Gold prices shot up in mid-session U.S. trading on Wednesday after the Federal Reserve expanded its quantitative easing program and stressed policy will stay loose.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.54% at USD1,718.75 a troy ounce in U.S. trading, up from a session low of USD1,708.65 and down from a high of USD1,724.75 a troy ounce.
Gold futures were likely to test support at USD1,708.65 a troy ounce, the earlier low, and resistance at USD1,733.65, the high from Nov. 30.
The dollar weakened after the Federal Reserve announced plans to continue stimulating the U.S. economy, which sent gold gaining.
The Fed is currently running a round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery, and going forward, the Fed will purchase an additional USD45 billion in Treasury holdings from banks to spur recovery.
Such policy tools send stocks rising by design to encourage investing and job creation, which weakens the greenback as a side effect, a recipe for firming gold prices since the yellow metal and the greenback trade inversely from one another.
The additional Treasury purchases will take place of the Fed's so-called Operation Twist program, under which the Fed swaps USD45 billion a month in short-term Treasuries for long-termer U.S. government debt.
Operation Twist will expire at year end.
Benchmark interest rates remained unchanged at a target 0.25% though the Fed stressed they will stay that way until unemployment rates make major improvements.
"The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored," the Fed said in a statement.
The unemployment rate currently stands at 7.7%, according to the November jobs report.
Meanwhile on the Comex, silver for March delivery was up 2.09% and trading at USD33.707 a troy ounce, while copper for March delivery was up 0.82% and trading at USD3.717 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.54% at USD1,718.75 a troy ounce in U.S. trading, up from a session low of USD1,708.65 and down from a high of USD1,724.75 a troy ounce.
Gold futures were likely to test support at USD1,708.65 a troy ounce, the earlier low, and resistance at USD1,733.65, the high from Nov. 30.
The dollar weakened after the Federal Reserve announced plans to continue stimulating the U.S. economy, which sent gold gaining.
The Fed is currently running a round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery, and going forward, the Fed will purchase an additional USD45 billion in Treasury holdings from banks to spur recovery.
Such policy tools send stocks rising by design to encourage investing and job creation, which weakens the greenback as a side effect, a recipe for firming gold prices since the yellow metal and the greenback trade inversely from one another.
The additional Treasury purchases will take place of the Fed's so-called Operation Twist program, under which the Fed swaps USD45 billion a month in short-term Treasuries for long-termer U.S. government debt.
Operation Twist will expire at year end.
Benchmark interest rates remained unchanged at a target 0.25% though the Fed stressed they will stay that way until unemployment rates make major improvements.
"The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored," the Fed said in a statement.
The unemployment rate currently stands at 7.7%, according to the November jobs report.
Meanwhile on the Comex, silver for March delivery was up 2.09% and trading at USD33.707 a troy ounce, while copper for March delivery was up 0.82% and trading at USD3.717 a pound.