Gold rose on Friday, pushing prices higher for the week after the Federal Reserve’s announced a major monetary policy shift on Thursday that would allow employment and inflation to run stronger for longer with a boost to interest rates.
The move to a monetary policy stance similar to the Reserve Bank of Australia (RBA) implies that US benchmark interest rates will remain lower for longer, perhaps not changing for several years while the Fed looks for signs of sustained economic growth and improving job numbers.
The Fed is shifting to a policy of average inflation targeting which would see the Fed would inflation to run above its 2% target to make up for periods when inflation runs below it (like it has sone since 2012 at 1.4%) – signalling that a long period of very low-interest rates lies ahead.
After volatile trading on Thursday, which briefly sent bullion surging higher immediately after the announcement by the Fed, gold ended sharply lower, with investors attributing that fall to profit-taking.
Friday saw gold reverse that selling and Comex December gold rose $US42.30, or 2.2%, to settle at $US1,974.90 an ounce. That rise had eased for $US40 0r 2.07% in late electronic trading.
The most-active Comex December silver contract meanwhile, added 59 cents, or 2.2%, to settle at $US27.79 an ounce.
For the week, gold saw a weekly rise of 1.4%, while silver rose by nearly 4%.
Comex December copper added 1% Friday to end at $US3.0195 a pound, with prices based on the most-active contract prices settling above $US3 for the first time since August 19 and rising by a solid 3.5% for the week.
Meanwhile, iron ore prices fell by $$US3.07 to $US124.37 on Friday for 62% Fe iron ore fines delivered to northern China. That was a fall of 2.4% for the week.
