Gold gains in Asia as Fed holds steady as expected, notes prices data

Investing.com –

Investing.com – Gold posted gain in Asia on Friday as the Fed held as expected and signaled that future interest rate hikes depend on key economic data from inflation and wage growth.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange gained 1.08% to $1,262.94 a troy ounce. Copper traded at $2.870 a pound, 0.03%.

Overnight, gold prices traded slightly below break-even on Wednesday, as the dollar edged higher ahead of the Federal Reserve’s rate decision later during the session but weaker-than-expected housing data capped losses.

The Federal Reserve voted Wednesday not to raise its key interest rate, and said it expected to begin normalising its $4.5 trillion balance sheet “relatively soon.”

The Commerce Department said on Wednesday new home sales rose 0.8 percent to a seasonally adjusted annual rate of 610,000 units last month.

May’s sales pace was revised down to 605,000 units from the previously reported 610,000 units.

Monetary policy, however, remained front and center

In a move largely expected in financial markets, the policymaking Federal

Open Market Committee (FOMC) agreed to keep its benchmark rate target at 1%-1.25%.

The accompanying statement revealed concerns among policymakers about the recent slowdown in inflation, which remained well below the central bank’s target of 2%.

Inflation data has undershot market expectations for four-straight months, showing little sign of improvement but policymakers remained optimistic that the pace of inflation will stabilise over longer-term.

“Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance,” the Federal Reserve July policy statement noted.

The Federal Reserve statement also noted that interest rates are likely to remain low for “some time”, highlighting that increases in its benchmark rate will depend on incoming economic data.

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