By Peter Nurse
Investing.com - Gold prices pushed higher Thursday, helped by the Federal Reserve’s downbeat assessment of the U.S. economic outlook and the confirmation of a continued loose monetary policy.
At 10:25 AM ET (14:25 GMT), gold futures on New York’s Comex gained 1.8%, to $1,752.05.
Late Wednesday the Federal Reserve said it would hold the benchmark interest rate near zero, with most officials predicting it will stay at these low levels through 2022.
The Fed quarterly predictions pointed to a long road toward economic recovery, with U.S. GDP forecast to contract by 6.5% in 2020 and unemployment to fall to 9.3% in the final three months of the year from May’s 13.3%.
Fed chair Jerome Powell reiterated after the meeting that the central bank is committed to “do whatever we can, for as long as it takes."
“The reason that ultra-loose monetary policy is a positive for gold is that it applies downward pressure to long-term U.S. real yields...[that] effectively increases the appeal of the precious metal relative to U.S.-interest earning assets,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia (OTC:CMWAY), Bloomberg reported. That “effectively increases the appeal of the precious metal relative to U.S.-interest earning assets.”
Earlier this week investment bank Goldman Sachs (NYSE:GS) predicted gold climbing to $1,800 per ounce on a 12-month basis. That would be a new high for the year, above the $1,788.80 reached at the beginning of April, which was also the highest since 2012.