Gold prices climb after Fed stands pat – MarketWatch

Gold futures on Friday looked ready to log their highest close in almost a month, as prices rallied on the back of the Federal Reserve’s decision to keep interest rates at historically low levels.

Gold for December delivery

GCZ5, +1.71%

jumped $23.20, or 2.1%, to $1,140.20 an ounce on Comex. A close around this level would be the highest since Aug. 24. December silver

SIZ5, +1.17%

 also gained 24.1 cents, or 1.6%, to $15.225 an ounce.

For the week, gold is on pace for a 3.3% gain, while silver is up about 5%.

The yellow metal settled lower Thursday, then climbed in electronic trading after the U.S. central bank opted to stand pat on rates, though the Fed implied a hike is still on tap before the year’s end.

“Perhaps this is a mini-perfect storm for gold,” said William Adams, head of research for FastMarkets Ltd., in a note Friday. Elements of the storm include “prices are low, other asset classes are relative high [and] interest rates will stay down for longer,” he said.

Analysts have said that higher interest rates would have hurt gold because it doesn’t pay interest, making it a less attractive investment. Plus, higher rates lift the dollar

DXY, +0.20%

and a stronger greenback can weigh on dollar-denominated commodities as they become pricier for holders of other currencies.

While gold has reacted very positively to the Fed news, it “remains stuck in the same ‘no man’s land’ as it was before,” said Brien Lundin, editor of Gold Newsletter.

‘In order for the yellow metal to mount a sustained rise, we either need to get the first hike out of the way …’

Brien Lundin, Gold Newsletter

He suspects that investors bought gold after the decision based on the “possibility that the Fed won’t be able to raise rates until next year, if at all any time in the near future,” he said.

See also: 6 markets that moved the most after the Fed decision

But “in order for the yellow metal to mount a sustained rise, we either need to get the first hike out of the way, or get supporting evidence that the U.S. itself is entering a slowdown that would stay the Fed’s hand for some time,” said Lundin.

Other metals rallied, with the exception of copper, which saw its December contract

HGZ5, -2.65%

 drop 6.7 cents, or 2.7%, to $2.385 a pound on Comex.

October platinum

PLV5, +1.53%

 traded at $986.50 an ounce, up $18.10, or 1.9%, while December palladium

PAZ5, +1.34%

 tacked on $8.25, or 1.4%, to $607.45 an ounce.