Gold and other precious metals-related exchange traded funds could continue to gain momentum as the Federal Reserve takes a more dovish stance, but a low inflation outlook may keep a lid on gains.
Gold ETFs, including tthe SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), were up 0.3% Wednesday after the Fed announcement. Comex gold futures were relatively flat at $1,119.8 per ounce.
The iShares Silver Trust (NYSEArca: SLV) was up 0.1% and the ETFS Physical Silver Shares (NYSEArca: SIVR) was 0.4% lower Wednesday while Comex silver futures dropped 0.6% to $14.5 per ounce.
Meanwhile, the ETFS Physical Palladium Shares (NYSEArca: PALL) gained 1.3% as the palladium spot price was 1.6% higher to $501.6 per ounce. The ETFS Physical Platinum Shares (NYSEArca: PPLT) increased 0.4% as the platinum spot price added 0.9% to $881.9 per ounce
The Fed held off on a rate hike at its January meeting and gave no indication that it would steer from its interest rate normalization path, reports Jeff Cox for CNBC.
The Federal Open Market Committee, though, did acknowledge that it was “closely monitoring” the volatility, which has added to speculation of a further rate hikes any time soon.
Precious metals have been weakening last year on fears of higher interest rates as the hard asset does not offer a yield and would be less appealing to investors.