AGE Daily Gold Update

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

9/18/2019: Gold gains, then drops after Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.2% to close near $1,516 ahead of the Fed's decision on interest rates. The metal then dropped around 1% to just under $1,500 in electronic trade after the central bank's forward guidance was more hawkish than expected, boosting the dollar and pressuring alternative stores of value.

At the conclusion of its two-meeting on monetary policy, the Federal Reserve reduced interest rates by a quarter-point, as widely expected, in order to insulate the economy from slowing growth and rising trade-war tensions.

But the committee also cast doubt on the likelihood of additional rate cuts this year, which came as something of a surprise to the markets. In dot-plot projections, only 7 of 17 members foresee another quarter-point reduction this year.

The relative hawkishness of the Fed's forward guidance boosted the dollar, which immediately shifted from minor losses to a gain of 0.4% against major rivals. Fewer rate cuts support the buck by making it more attractive to forex investors seeking yield.

Gold fell, in turn, because a stronger dollar puts pressure on commodities priced in it for global trade, making them more expensive in other currencies.

The other precious metals fell before the Fed decision and extended the losses afterward. Silver dropped 1.2% and nearly doubled that loss after hours. Platinum and palladium fell 1% each in the regular session, then slid another 1% and 0.5%, respectively, in electronic trade.

At the Comex close: December gold added $2.40 to $1,515.80; December silver lost 22 cents to $17.92; October platinum slid $9.60 to $934.60; and December palladium shed $15.50 to $1,582.20 an ounce.