“The focus will be on the number of hikes Federal Reserve participants see through the year”, said Bill Northey, chief investment officer at Private Client Group of US Bank.
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“But the impact may be limited as the market had already largely ruled out a near-term rate rise and we do not believe the following Fed statement was outside of expectations”, he said, adding the central bank’s policy was shaping up to be long-term supportive of gold. There is grave uncertainty about whether British voters will choose to leave the European Union in a June 23 referendum.
The Dow Jones industrial average lost 58 points, or 0.3%. The Standard & Poor’s 500 index rose five points, or 0.2 percent, to 2,080 and the Nasdaq composite rose 10 points, or 0.2 percent, to 4,854.
In the latest economic report that came out as Fed policymakers began meeting, the government reported that retail sales rose a better-than-expected 0.5% in May.
Spot gold rose 0.8 percent to $1,288.33 an ounce at 1157 GMT.
Higher rates mean higher borrowing costs, which usually make a currency more attractive to investors seeking higher yields than in other currencies. As a non-yielding asset, gold benefits from a low interest rate environment, as well as a weak dollar.
The death of the U.K. Labor Party lawmaker led to a suspension of campaigning before the June 23 Brexit referendum.
USA housing starts in May fell to a less-than-expected 1.16 million in May while analysts had expected 1.15 million.
In corporate news, Cisco Systems Inc. shares fell 1.1% after analysts at Goldman Sachs downgraded the stock rating to neutral from buy. Britain’s FTSE 100 index tumbled 2%.
The sterling dropped to a two-month low of 1.4109 against dollar on Tuesday, and fell to 149.16 against the Japanese yen, the lowest in 34 months.
ENERGY: Benchmark U.S. crude oil futures dropped 79 cents to $47.70 a barrel in electronic trading on the NY Mercantile Exchange. The metal pared gains in electronic trading after the close.
In a report to clients Tuesday, investment strategists at Bank of America Merrill Lynch said that because of uncertainty about the June 23 vote in the United Kingdom, as well as daily changes in the rhetoric of the US presidential election, “it may be a good time to protect some profits in equities”.
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The policy making arm of the Federal Reserve is leaving the federal funds rate at a quarter of a percentage point, unchanged from the rate decided upon at the last meeting in April, according to the Federal Open Market Committee’s statement.
