Editor’s Note: The article was updated to include comments from Fed Chair Janet Yellen.
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Among other precious metals, spot silver touched a two-week high of $19.88 an ounce.
The central bank appeared more confident on Wednesday, saying in its statement that near-term risks for the economic outlook “appear roughly balanced”.
The Fed kept its target rate for overnight lending between banks in a range of 0.25 percent to 0.50 percent, where it has been since it hiked rates in December for the first time in almost a decade.
Seoul surged one percent, with troubled Hanjin Shipping the stand-out performer, piling on nearly 30 percent after its largest shareholder agreed to provide emergency cash to prevent it from going under. As expected, the FOMC left interest rates on hold with the Fed Funds rate at 0.25-0.50%, although there had been some reservations over the risk of a surprise rate increase.
In her news conference, Yellen offered a simple explanation for why the Fed didn’t raise rates: The economy can still grow without hurting itself.
Indonesia’s central bank on Thursday cut its benchmark interest rate for the fifth time this year, in line with expectations.
Shares of Amazon.com AMZN.O rose 1.9 percent to close above $800 for the first time following a price target raise by BMO. As real interest rates rise, so too do holding costs for gold, eroding its appeal.
All that is true, but the key takeaway is that after yesterday’s performance, the trading community is convinced that the Fed is overly cautious and even a bit afraid, and that it would not take much in the way of a few disappointing economic stats for them not to hike at all until 2017. Conditions in the labor market are strengthening and while inflation is low we continue to expect to see it rise to our target of 2%’.
European stocks rose on Thursday after the Federal Reserve stood pat on rates but indicated a hike would come later this year. In its statement, the bank said the case for higher rates was stronger but it wanted to wait for more evidence of progress. Wednesday’s vote showed that the chair, mindful that she and her allies represent the central bank’s power base, isn’t unduly bothered by a trio of dissents from regional bank presidents. Some leaders argue for raising rates, and others make the case against a rate hike. This change could mean that the Fed’s tone is shifting decidedly toward a hike in the coming months.
Core inflation expectations, which strip out volatile food and energy prices, were also relatively unchanged.
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“It is becoming clear that central banks around the world see themselves supporting the economy with loose monetary policy while governments remain slow with fiscal reform”, said Lorne Baring, managing director at B Capital Wealth Management.
