Market Highlights
- Fed to maintain low interest rates
- Gold at fresh highs
Fed to maintain low interest rates
The US dollar fell broadly against major currencies as the US central bank pledged to maintain liquidity in the markets by keep interest rates low for “an extended period”. As forecasted, Fed rates are maintained at a range of 0 to 0.25%. The Fed has expressed that even though the US economy has started picking up since the last FOMC meeting in September, recovery is expected to be muted and sluggish.
“Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit,” commented the Fed.
Gold at fresh highs
Meanwhile, fueled by the Federal Reserve’s decision to keep interest rates low, the bullion rose to a record high of $1,097.25 on Wednesday. “The Fed is still looking at the low rates for an extended period of time. The easy monetary policy is here to stay for a little longer. The conditions remain in place for gold to continue to move higher,” said Tom Hartmann, broker at California-based Altavest. Further momentum was provided by Reserve Bank of India’s purchase of 200 tonnes of gold from the International Monetary Fund.
“India has (prompted) new speculation of pent-up demand for gold diversification by central banks,” said Michael Lewis, head of commodities research at Deutsche Bank.
By Ho Canjie(CJ), Account Manager
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