Gold rose for a third day on Wednesday to hit record highs above $1,290 an ounce (Rs 18,971 per 10 grams) after the Federal Reserve signalled it was prepared to pump fresh cash into the economy to boost a faltering economic recovery, hurting the dollar and whetting investor appetite for bullion.
The US Federal Reserve had on Tuesday retained key interest rates at near-zero levels as part of its continuing efforts to boost the slowing economy.
The apex bank said that the pace of economic activities as well as employment generation has “slowed down in recent months”, and left the benchmark interest rate unchanged. “The key market driver was the .... statement and the subtle change in language that it was “prepared to provide additional accommodation if needed” a shift from the previous wording that it “will employ its tools as necessary’,” said Credit Agricole analyst Robin Bhar. “A combination of a weakening dollar and the Federal Reserve indicating it may loosen monetary policy further is pushing gold to record highs," ETX Capital senior trader Manoj Ladwa said.
"While some are calling for it to run out of steam around the 1,300-dollar level, the momentum still clearly remains to the upside." “The dollar is being dumped as the suggested credit easing spawned expectations of lower interest rates” in the US, said Daisuke Karakama, market economist at Mizuho Corporate Bank.
Silver edged ever-closer to its highest in thirty years, against a backdrop of investors seeking cheaper safe-haven assets.
Spot gold hit a new record of $1,294.95 an ounce, before easing to $1,293.10 an ounce, still showing a 0.6 per cent gain on the day. US gold futures rose $21 an ounce to $1,294.50, having hit a contract high at $1,296.5.