Shaw Capital Management Financial News: Gold Extends Rally to Record as Fed to Maintain Low Rates Through Mid-2013 | Shaw Capital Management Financial News

http://shawcapitalmanagementfinancialnews.com/2011/08/10/shaw-capital-management-financial-news-gold-extends-rally-to-record-as-fed-to-maintain-low-rates-through-mid-2013/

By Debarati Roy - Aug 9, 2011 1:04 PM PT

Gold futures advanced, extending a rally to a record for the second straight day, as the Federal Reserve pledged to keep its benchmarkinterest rate low at least through mid-2013.

Gold retreated from the settlement after equities rallied as investors studied today’s Fed policy statement. The metal has jumped 45 percent in the past year following bond buybacks by the central bank during two rounds of so-called qualitative easing, combined with the lowest borrowing costs ever.

“The anxiety premium for gold remains,” Adam Klopfenstein, a senior strategist at MF Global Holdings Ltd. in Chicago, said in a telephone interview. “People are disappointed that there was no mention of QE3, but the statement shows that the government is not willing to go too excessive to stimulate the economy.”

Gold futures for December delivery advanced $29.80, or 1.7 percent, to close at $1,743 an ounce at 1:49 p.m. on the Comex in New York. Earlier, the price reached a record $1,782.50. The metal topped $1,780 in electronic trading after the Fed statement and traded at $1,740.10 at 4:03 p.m.

Fed policy makers left the target interest rate in a range of zero percent to 0.25 percent. The Federal Open Market Committee discussed a range of policy tools to bolster the economy and said it is “prepared to employ these tools as appropriate.”

U.S. Debt

Yesterday, gold surged 3.7 percent, the most since March 2009, afterStandard & Poor’s cut the U.S. credit rating by one level from the top AAA grade. The S&P announcement spurred a rout in global equities and stoked concern that the U.S. may lapse into another recession.

Silver futures for September delivery fell $1.497, or 3.8 percent, to close at $37.883 an ounce on the Comex.

Platinum futures for October delivery climbed $32.80, or 1.9 percent, to $1,756.40 an ounce on the New York Mercantile Exchange. For the first time since 2008, gold traded at a premium to the metal used mostly in catalytic converters in vehicles. This year, platinum has dropped 1.2 percent, while gold has surged 23 percent.

Palladium futures for September delivery advanced $6.05, or 0.8 percent, to $734.55 an ounce on the Nymex.