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  • Gold remains steady ner seven-week highs at $1,950 after Fed’s decision.
  • The Federal Reserve keeps rates unchanged and commits to maintain an accommodative policy

 

Gold futures remain steady ner fresh seven-week hoghs at $1,950 after the Federal’s Reserve released its monetary policy decision. The yellow metal has rallied on Thursday amid a strong risk appetite, with equity markets surging and the USD on the back foot.

The Fed takes a wait-and-see stance

The Federal Reserve has kept its Fed Funds rate unchanged at the 0%0.25% range as widely expected on Thursday and reaffirmed its commitment to support US economy “promoting its maximum employment and price stability goals” against the impact of the COVID-19 pandemic.

The bank affirms that the economic activity and the employment levels have continued their recovery although they remain at levels well below those at the beginning on the year while the weaker consumer demand and the falling oil prices are holding down consumer inflation.

Furthermore, the monetary statement alerts that the coronavirus crisis will continue to weigh on the economic activity, employment and inflation in the near term, posing a significant risk to the mid-term economic outlook.

In this scenario, the Fed assures that interest rates will remain near zero “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2%”.

Beyond that, the Bank shows its readiness to increase its holdings of Treasury Securities, at least t the current pace to sustain the smooth market functioning and support the flow of credit to households and businesses.

Technical levels to watch