AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

3/20/2019: Gold dips, surges after Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold dipped 0.4% to close just under $1,301 ahead of the Fed's release of its post-meeting statement on monetary policy. The metal then surged above $1,315 in electronic trade after the Fed downgraded its growth outlook and delivered a surprisingly dovish message on rates, weakening the dollar and boosting demand for alternative stores of value.

While leaving interest rates unchanged, the FOMC pivoted emphatically away from the tighter monetary policy that has dominated its approach for the past two years. After three rate hikes in 2017 and four in 2018, the Fed now projects no hikes for 2019. As recently as December, the forecast called for three hikes this year.

Although it described the economy as being "in a good place," the Fed lowered its growth forecast to 2.1% from 2.3% for 2019 and cut its PCE inflation forecast to 1.8%.

Adding to its dovish shift, the central bank announced that it will stop unwinding its balance sheet by September. Known as "quantitative tightening," the program of selling the Treasurys accumulated during the Great Recession is viewed, like higher interest rates, as a drag on the economy.

The dollar immediately tumbled 0.5% to a three-month low after the Fed's statement. Tighter monetary policy has been a main source of support for the buck in recent years, attracting Forex investors seeking higher yields. A weaker dollar should prove bullish for gold by making it less expensive in other currencies. US Treasurys also rallied, pushing yields 10-year yields to a 15-month low.

The other precious metals were mixed before and mostly higher after the Fed's statement. Silver slid 0.4%, then bounced 20 cents higher in electronic trade. Platinum rose 0.8% and then another 0.7% after the Fed. Palladium rose 0.6% and held its gains after hours.

At the Comex close: April fell $4.80 to $1,301.70; May silver dropped 5 cents to $15.32; April platinum picked up $7 to $859.60; and June palladium rose $8.50 to $1,560.40 an ounce.