Forexpros – Gold prices were down in early Asian trading Wednesday as investors sold the precious metal and took up positions in assets denominated in the dollar, the yellow metal’s traditional hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,637.05 a troy ounce, down 1.57%.
Gold futures were likely to find short-term support at USD1,625.25 a troy ounce, Tuesday’s low, and resistance at USD1,681.55, Tuesday’s high.
Earlier during the day, the U.S. Federal Reserve left its benchmark lending rate unchanged at 0.25% and while the central bank did not rule out the possibility of further quantitative easing – asset purchases from banks that spur economic activity via pumping liquidity into the financial system – it did hint such moves would not come until next year, if they come at all.
The European economy will continue to put stress on U.S. markets, meanwhile, but inflation won’t gallop out of comfort zones, the Federal Open Market Committee said.
“Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate,” the Fed said in a statement after its regularly scheduled monetary policy meeting.
Quantitative easing weakens the dollar, which often makes gold an attractive hedge, and since no such ultra-loose monetary policies are on the horizon, the dollar rallied, leaving gold room to fall.
Elsewhere on the Comex, silver futures for March delivery were down 1.06% and trading at USD30.928 a troy ounce, while copper futures for March were up 0.78% at USD3.414 a pound.
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