Fed Announcement Leads to Strength in SPDR Gold Trust (ETF)
By Hassan Ali
Having traded largely flat for the day, gold shot up following the Federal Reserve’s announcement at 2:00 PM EST. The weakness in the US dollar added to that strength during today’s trading session.
As of 3:59 PM EST today, prices of gold for immediate delivery were up by 2.35% at $1261.28 per troy ounce. Following the yellow metal, the SPDR Gold Trust (ETF) (NYSEARCA:GLD) ended today’s trading session up by 2.23%. Right before the announcement, the prices were trading at $1,241.14 per troy ounce.
Silver followed the yellow metal and traded up after the Fed’s announcement, trading up by 2.30% at $15.63 per troy ounce as of 3:59 PM EST today. Following the precious metal, the iShares Silver Trust (ETF) (NYSEARCA:SLV) ended today’s session up 2.27%.
After a two-day meeting, the Federal Open Market Committee (FOMC) decided to keep the key interest rate in the US unchanged at between 0.25% and 0.5%. However, what worried investors was the announcement that the Fed expected two interest rate hikes for 2016, compared to an earlier forecast of four—announced alongside the interest rate hike in December.
The Fed said that the US economy was “expanding at a moderate pace despite the global economic and financial developments of recent months.” It said that inflation in the country grew during the last couple of months, but it remained under the 2% target set by the committee.
Fed’s Statement; What Does It Mean for Gold?
Moreover, following the announcement, the US dollar lost footing. As of 3:59 PM EDT today, the US dollar was trading down by 0.95% against a basket of six currencies. This increased the attractiveness of the precious metals that are denominated in the greenback.