June 10, 2020 / 2:52 PM / a month ago

PRECIOUS-Gold extends gains on dovish Fed statement

    * FOMC statement sees U.S. GDP decline 6.5% in 2020
    * Dollar falls to three-month low
    * GRAPHIC-Reuters poll forecasts vs Fed's December forecasts
tmsnrt.rs/3cP4tig
    * Gold could reach $1,800/oz on a 12-month basis - Goldman
Sachs

 (Adds analyst comment, details; updates prices)
    By Asha Sistla
    June 10 (Reuters) - Gold rose nearly 1% to a one-week high
on Wednesday after the U.S. Federal Reserve held onto its pledge
to ease the economic pain from the coronavirus pandemic,
boosting bullion's safe-haven appeal.
    Spot gold        rose 0.8% to $1,728.76 per ounce by 3:07
p.m. ET (1907 GMT). U.S. gold futures         settled slightly
lower by 0.1% at $1,720.70.   
    "(Gold) hit daily high following the FOMC statement, which
painted a pretty dour picture for the U.S. economy, although not
unexpected," said Kitco Metals senior analyst Jim Wyckoff. 
    "We didn't see any good news coming out of that FOMC
statement and we did see that the interest rates are going to
remain at the same levels, which are very low, through 2022 -
and that's probably a little friendly for the gold market too."
    The Fed repeated its promise of continued extraordinary
support for the economy as policymakers projected a 6.5% decline
in gross domestic product this year and a 9.3% unemployment rate
at year's end.              
    On Wall Street, major indices such as the S&P 500        and
Dow Jones Industrial Average        were negative, while the
dollar slumped to fresh three-month lows against other major
currencies as investors.                         
    Large stimulus measures tend to support gold, which is often
considered a hedge against inflation and currency debasement. 
    "People are using gold as a safe-haven asset and also many
believe that inflation will pick up in the coming quarters,"
said Phil Streible, chief market strategist at Blue Line Futures
in Chicago. 
    Goldman Sachs expects gold to reach $1,800 per ounce on a
12-month basis and the tail risk of above-target inflation as a
potential driver for prices to climb beyond $2,000.             
    Elsewhere, silver        rose 2.3% to $17.99 an ounce,
palladium        fell 0.6% to $1,929.26, while platinum       
fell 0.9% to $829.83.

 (Reporting by Asha Sistla in Bengaluru
Editing by Marguerita Choy and Jonathan Oatis)
  
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