Gold Prices Down But Fed Decision A Non-Event
(Kitco News) - The gold market is holding near session lows but is not seeing fresh selling pressure as the Federal Reserve leaves interest rates unchanged while keeping an optimistic tone on the U.S. economy and future interest rate hikes.
In a highly anticipated move, the Federal Reserve left its Fed Funds rate in a range between 1.75% and 2%. On the economy, the central bank said that activity “has been rising at a strong rate.”
"Risks to the economic outlook appear roughly balanced," the statement reiterated.
Gold prices were under pressure ahead of the decision and is relatively unchanged in initial reaction. December gold futures last traded at $1,227.60 an ounce, down 0.47% on the day.
On the inflation front, the central bank said that they continue to expect inflation to reach a sustainable 2% over the medium term. Economists have noted that there is not much for markets to chew on in the statement.
Currently markets are pricing in a more than 90% chance that the Federal Reserve raises interest rates in September.
Avery Shenfeld, senior economist at CIBC Markets said that there is nothing for markets to think about and recommended that traders just carry on with their day.
“Nobody was expecting the Fed to raise rates today, and nobody was expecting the committee to back away from its plans for further hikes ahead. And everbody can therefore pat themselves on the back for being right, as the central bank stuck to the expected script,” he said. “Or you could say, the last script, since the wording of the statement was virtually identical to the prior one.”