Gold prices up in Asia as Fed holds steady, eyes on Eurogroup ahead
Investing.com – Gold prices gained in Asia on Thursday as investors saw the latest Federal Reserve meeting signal that a hike in interest rates this year remains a work in progress.
The latest Federal Reserve policy meeting ended Wednesday with language that more “decisive evidence” needed before it starts raising interest rates.
Chairwoman Janet Yellen’s remarks to reporters after the rate-setting Federal Open Market Committee left the federal funds rate near zero reaffirmed its two conditions for starting to “normalize” rates.
“Further improvement in the labor market” and becoming “reasonably confident” inflation will rise to the 2% target “over the medium term.”
Yellen’s other message, reinforced by downwardly revised funds rate projections, is that the path of rate hikes after liftoff will be “gradual.”
On the Comex division of the New York Mercantile Exchange, gold for August delivery rose 0.62% to $1,184.10 a troy ounce.
Elsewhere, Silver for July delivery gained 0.66% to $16.053 a troy ounce.
Copper for July delivery fell 0.05% to 2.615 a pound.
In Europe, the Greece Central Bank warned that the nation could be facing an “uncontrollable crisis,” if a deal is not reached with its international creditors to unlock critical aid deemed necessary to stave off bankruptcy.
The comments were delivered ahead of Thursday’s meeting of euro zone finance ministers in Luxembourg. Over the last three days, deposit outflows from Greek banks have reached a level between $1.75-$1.85 billion, according to Dow Jones.
Overnight, gold futures fell mildly on Wednesday extending losses from one session earlier.
It is more likely that the U.S. Central Bank could wait until September before lifting rates for the first time in nearly a decade.
Yellen has previously emphasized that she would like to see drastic improvements in wage and GDP growth before the FOMC lifts its Fed Funds Rate for the first time since June, 2006.
The Fed’s benchmark interest rate has been underpinned at zero to 0.25% since the end of the Financial Crisis of 2008. The Fed would also like to see inflation move toward its targeted goal of 2% before it begins a process of policy normalization.
Since the FOMC last met, the U.S. economy added 280,000 jobs in May while hourly wages rose significantly by 0.3%. Retail sales, meanwhile, a closely watched metric, surged by 1.2% last month, fueled by increases in motor vehicle and gas sales.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of increasing rates.