Gold prices continue to rise and reached a fresh two-week high, as the US dollar fell to the Federal Reserve’s decision to refrain from raising interest rates and reducing the forecast for the expected number of rate hikes next year.
On Wednesday, the Federal Reserve left interest rates unchanged. In addition, the Fed reduced the number of expected rate increases this year from two to one and predict the less aggressive growth of the interest rate for the next two years.
Nevertheless, the US central bank signaled that might tighten monetary policy until the end of the year, if the labor market continues to improve.
The next Fed meeting is scheduled for early November and mid-December. Economists believe that the bank officials will be able to avoid raising interest rates in November, partly because the meeting will take place just a few days before the US presidential election.
According Fed funds futures the estimated probability of a hike in November is 15% and 60% in December.
The gradual increase of the rate shall be less of a threat to the gold price
In the currency market, the USD index which tracks the greenback against a basket of six majors, fell by 0.45% to 95.05 from a six-week high in the previous session, 96.29.
Weak US dollar usually supports gold, as it boosts the metal’s appeal as an alternative asset and decrease the price of dollar-denominated commodities for holders of other currencies.
The cost of the October futures for gold on COMEX rose to $ 1340.3 per ounce.
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