Spot Gold Rebounds as Fed Adopts ‘Patient’ Interest-Rate Stance
(Bloomberg) -- Spot gold rebounded after the Federal Reserve signaled it’s moving away from its bias just last month toward higher U.S. borrowing costs.
The metal rose 0.4% to $1,316.72 an ounce at 2:17 p.m. in New York, after falling as much as 0.2 percent earlier. The Federal Open Market Committee will be “patient” on any future interest-rate moves and signaled flexibility on the path for reducing its balance sheet, the central bank said Wednesday.
Gold is up more than 2 percent this year and set for a fourth straight monthly gain, while a gauge of the dollar is down for a third month. The metal is seeing renewed interest as a store of value as investors weigh prospects of fewer U.S. rate hikes this year and track signs of slower global growth. Bloomberg Economics’ early indicator showed China’s economy cooled further in January, while companies like Apple Inc. and Caterpillar Inc. are feeling the pain.
“It seems like the Fed is kind of backpedaling on how hawkish they were in the past,’’ Phil Streible, a senior market strategist at RJO Futures, said by phone from Chicago. ‘‘The Fed’s going to be more muted I think going forward.’’
Lower rates generally boost the appeal of bullion, which doesn’t pay interest.
Investor sentiment in gold remains strong, with holdings in bullion-backed exchange traded funds at the highest since April 2013 after about 61 tons were added this year.
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