Gold futures pared much of their earlier losses by the Comex close on Wednesday, then fell further in electronic trading after the Federal Reserve decided to keep trimming its bond-buying program by $10 billion a month, as expected.
Traders spent the regular trading session assessing a weaker-than-expected report on U.S. first-quarter GDP along with the strongest private-sector jobs growth in five months, waiting for the Fed decision, which came after the Comex close, and looking ahead to Friday’s much-anticipated monthly employment report from the government.
Gold for June delivery GCM4 +0.38% fell 40 cents to settle at $1,295.90 an ounce on the Comex division of the New York Mercantile Exchange, ahead of the central bank’s policy announcement. Tracking the most-active contracts, prices climbed roughly 1% for the month, with much of the gain attributable to safe-haven demand for the metal in the wake of tensions surrounding Ukraine. In electronic trading after the FOMC decision, June gold was down at $1,291.60 an ounce.
July silver SIN4 +0.79% lost 36 cents, or 1.9%, to $19.17 an ounce in regular Comex trading, with prices down close to 3% for the month, based on the most-active contracts.
As expected, the U.S. central bank trimmed the size of its bond-buying strategy by $10 billion to $45 billion. This is the fourth straight meeting with an identical, gradual, reduction.
The Fed also kept its forward guidance unchanged, saying that it’s appropriate to keep rates at zero “for a considerable time” after the bond buying program ends.
One interesting nugget is the expectation of an extended time period before the FOMC actually raises interest rates, “but no time table to do so,” said Jeffrey Wright, managing director at H.C. Wainwright. “We still believe this implies [the] taper will conclude in October/November at this pace,” with approximately six months before an actual change in targeted interest rates, he said. “The implication for gold is unchanged at present; we do think gold could experience some short term weakness but is range bound in $1,250 – $1,325 band at the present time.”