Gold futures ended sharply higher Thursday after the U.S. Federal Reserve announced the much anticipated third round of quantitative easing measures following its two-day policy meeting. Also out of the U.S. was some weak initial jobless claim data, but it did nothing to dampen investor sentiments with the precious metal climbing to a near seven-month high.
The Federal Reserve's new steps to stimulate the sluggish U.S. economy kicks-off with the bank buying $40 billion of agency mortgage-backed securities each month, starting Friday. The move makes the U.S. treasuries even less lucrative, with the Fed hoping cash-rich investors get off the sidelines to purchase consumer goods, riskier assets and homes.
In addition to embarking on a third round of quantitative easing, the Fed also extended its vow to keep interest rates at rock-bottom rates until mid-2015. Policy makers have also decided to keep in place the Operation Twist program that swaps short-term bonds for longer-term assets.
The weekly initial jobless claims in the U.S. rose more than expected, although unemployment rate dropped to 8.1 percent from 8.3 percent. Officials attributed the increase in jobless claims partly to the impact of Hurricane Isaac, as major storms can often delay unemployment filings.
Gold for December delivery, the most actively traded contract, jumped $38.40 or 2.2 percent to close at $1,772.10 an ounce Thursday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery traded at an intraday high of $1,768.20 and a low of $1,720.00 an ounce.
Yesterday, gold futures ended lower even as investors continued to be cautious as the two-day U.S. Federal Reserve policy meet kicked-off, with high expectations of further quantitative easing measures forthcoming this time around.
The euro traded higher against the dollar at $1.2965 on Thursday, as compared to $1.2899 late Wednesday in North America. The euro scaled a high of $1.2967 intraday and a low of $1.2860.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.45 on Thursday, down from 79.70 in North American trade late Tuesday. The dollar scaled a high of 79.83 intraday and a low of 79.36.
In other economic news from the U.S, the Labor Department said initial jobless claims rose to 382,000 in the week ended September 8, from the previous week's revised figure of 367,000. Economists had been expecting jobless claims to edge up to 370,000 from the 365,000 originally reported for the previous week.
Separately, the Labor Department said its producer price index surged up by 1.7 percent in August following a 0.3 percent increase in July. Economists had expected the index to increase by 1.4 percent. Excluding the jump in energy prices as well as a notable increase in food prices, the core producer price index edged up by 0.2 percent in August after rising by 0.4 percent in July.
From the eurozone, the Swiss National Bank has decided to leave the minimum exchange rate unchanged at CHF 1.20 per euro as expected by economists. The central bank also retained the target range for the three-month Libor rate at 0.0-0.25 percent.
by RTT Staff Writer
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