Gold for June delivery rose USD3.20, or 0.3%, to settle at USD1,243.40 an ounce.
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Spot silver climbed 0.6 percent to $17.265 an ounce, trading near the highest since May after entering a bull market last week.
“Gold has traded in a choppy $US10 range but ultimately the FOMC has not impaired the constructive sentiment in gold and silver”.
Silver is having a stellar 2016, and is even outperforming gold. The long – term gold silver ratio (since 1973) is 57.7. The ratio closed down almost 6% at 72.72 on Friday.
Silver prices have been on a strong rising trend lately. The ratio was as high as 83.5 in early March. Year-to-date, silver is up 26 percent at over $17. Additionally, silver is benefiting from improving factory data out of China, which is the world’s biggest consumer of base metals.
Gold sector bellwether Barrick Gold (NYSE:ABX) kept its production forecast this year unchanged despite lower revenues and output in the first three months. “The weaker dollar has supported demand, but investors remain wary heading into the central bank meetings”, ANZ said in a note. The dollar index, which tracks the performance of the U.S. currency against a basket of six peers, has declined almost 4% since the start of the year and was recently seen trading near six-month lows.
The financial institution says that a dovish Federal Reserve, the continuation of the European Central Bank’s (ECB) quantitative easing and falling expectations of a United States central bank rate hike are all conditions for both gold and silver to maintain their upward trend. According to the CME FedWatch Tool, the Fed is unlikely to raise interest rates before the November presidential election.
There is a change in US monetary policy behind the trend.
However, analysts at Goldman Sachs have warned that the latest rally in commodities, which includes precious metals and energy, is not backed by fundamentals.
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“The Fed cited the moderation in consumption and softness in exports and investment spending, which in our view positions them to wait until September for enough signs that at least consumption is turning firmer”, said Avery Shenfeld, chief economist for CIBC Capital Markets.
