It seems that gold has received some support after the statements of the President of the US Federal Reserve, despite keeping the previous policy unchanged.
However, Jerome Powell followed the same tone that inflation is still caused by temporary factors, while still waiting for more before starting to tighten monetary policies.
Urgent: A side surprise from the Fed
During that time of trading today, Thursday, gold increased strongly by more than 1%, to raise the price of spot delivery for an ounce of gold to levels of 1819 dollars, an increase of about 20 dollars.
And the price of futures contracts for October delivery rose to levels of $ 1820 an ounce, an increase of about $ 18.20, and these are the highest levels for gold since July 19.
The rise of gold was reinforced by the decline of the dollar index, which measures the performance of the currency against a basket of major currencies, as it fell to its lowest level in 4 weeks.
The dollar index fell 0.24 or 0.26% down to 92.08 levels, while the euro rose 0.21% and the sterling rose by about 0.3%, while the Australian dollar rose 0.28%.
Will the Fed surprise the markets, pay attention to those words?
Kyle Roda, an analyst at IG Markets, said that the Federal Reserve talked about the risks of inflation, downplaying their importance, as well as about reducing stimulus in a limited way, which gives gold room to rise in the short term.
The analyst at IG Markets added that the next level of resistance will be in the range of 1830-1840 dollars.
Powell said the US job market still has “some room to recover” before it is time to withdraw support and that he is “significantly far away” from considering an interest rate hike.
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The Federal Reserve kept the interest rate stable between 0.00% to 0.25%, in light of the Fed’s continued desire to support the US economy recovering from the Corona virus.
The Fed sees inflation rising significantly due to temporary factors, while the course of the economy still depends on the path of the virus.
The Federal Reserve maintained its positive expectations of the highest growth rate witnessed by the economy since World War II, and the Fed currently believes that there is a good amount of progress towards the goals, but they have not yet been achieved.
The Fed said it may allow for a while to allow inflation to rise above 2%, but the inflation target will remain at 2% over the long term.
The US Federal Reserve stated that it adheres to the current monetary policy until these goals are achieved.
He added that he is committed to holding at least $80 billion of Treasury bonds per month, and mortgaged securities of at least $40 billion per month until significant progress is made towards the Fed’s goals.
The Monetary Policy Committee said it takes into account the health crisis, labor market conditions, inflation expectations, and global developments.
The Committee will be ready to adjust the monetary policy stance as appropriate if risks arise that may hinder the achievement of the Committee’s objectives.
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