Gold holds losses after Federal Reserve keeps interest rates unchanged

NEW YORK/LONDON — Gold eased on Wednesday as the dollar strengthened, and stayed weaker after the US Federal Reserve kept interest rates steady as expected.

The Fed, after a two- day meeting, characterized the US economy as strong, keeping the central bank on track to increase borrowing costs in September.

Spot gold was down 0.3% at $ 1,219.60 an ounce by 2: 48 p.m. EDT (1848 GMT), close to a one-year low of $ 1,211.08 on July 19.

“Gold continues to flounder near recent lows after the Fed’s August statement gave no indication yet when the committee will diverge from the projected onehike-a-quarter strategy,” said Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York.

“As a result, the burgeoning trade wars on multiple fronts will continue to support the dollar, making the outlook for gold and other US dollar- denominated commodities clouded at best for the balance of the summer.”

US gold futures settled down $ 6, or 0.5%, at $ 1,227.60 per ounce, prior to the Fed statement.

“Nobody was expecting the Fed to raise rates today, and nobody was expecting the committee to back away from its plans for further hikes ahead,” said Avery Shenfeld, chief economist at CIBC Economics in Toronto. “The central bank stuck to the expected script.”

The US dollar, in which gold is priced, pared gains against a basket of leading currencies after the Fed statement. Earlier in the session, it firmed after a source familiar with the Trump administration’s plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports.

“Bullion is falling every time the US dollar is strengthening, but it’s unable to recover when the greenback loses ground, confirming that there’s little investor appetite for gold in this phase,” said ActivTrades chief analyst Carlo Alberto De Casa.

World stocks were mixed, with fears of an imminent escalation in the US-China tariff war holding back gains, though robust results from technology company Apple, Inc. boosted a key index on Wall Street.

“The trade tensions are also fueling safe- haven flows into the dollar. The US currency still appears to be the preferred safe haven rather than gold,” OCBC analyst Barnabas Gan said.

Silver declined 0.6% to $15.42 an ounce. Platinum dropped 2.1% to $817.24 an ounce and palladium slipped 1.3% to $ 917 an ounce. —