Investing.com - Gold and copper rose slightly in early Asia on Friday as the Federal Reserve kept its benchmark interest rate steady in the face of global economic volatility.
On the Comex division of the New York Mercantile Exchange, Gold for December delivery was quoted slightly higher along with Silver for the same month.
Copper for December delivery also gained.
Overnight, citing the negative effects of global economic weakness on U.S. inflation, the FOMC voted to leave its benchmark Federal Funds Rate at its current level between zero and 0.25% on Thursday. Nearly a decade has passed since the U.S. central bank has last raised short-term rates.
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the FOMC said in a statement.
Gold futures had ticked up to one-week highs before closing slightly lower on Thursday ahead of the Fed decision. Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in rising rate environments.
Adopting a relatively dovish stance, Fed chair Janet Yellen said the U.S. central bank will begin monetary policy normalization when it has seen "further improvement in the labor market," and it is "reasonably confident" that inflation is moving toward its targeted goal of 2%. Yellen also noted that large drags from falling energy and import prices should dissipate in the near future allowing long-term inflation to move back toward its long-term target.
Still, the Fed downgraded its median inflation forecasts at the meeting to 0.3% for the end of 2015, while lowering inflation expectations for the end of next year to 1.7%. The Fed now expects that inflation will not reach its 2.0% target until 2018.
The Fed also lowered its median forecasts for the Fed Funds Rate for the end of the year to 0.4%, from previous estimates of 0.6%. A bevy of short-term rates such as debt for credit card holders are pegged to the benchmark, which banks use to lend to other institutions on overnight loans. The Fed also lowered its rate forecasts for 2016 and 2017 to 1.7 and 1.9% respectively, representing a decline of 0.1% for each year.
In addition, the FOMC said four of its members do not see a rate hike occurring in 2015, up from two in June. One member of the FOMC, Richmond Fed president Jeffrey Lacker, dissented, recommending a 0.25% interest rate hike at the meeting.