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Regal Group International: Gold races to record high after key U.S. Fed announcement.
Bullion’s upward surge shows no signs of slowing.
The U.S. Federal Reserve, after a one-day economic meeting has decided to make no policy changes at this point but said it has laid the initial groundwork for further monetary stimulus measures and also expressed concern over low inflation.
Spot gold reached a new record of $1,290.85 an ounce before dropping back to close nearer the $1,287 an ounce mark while Regal Group International saw gold futures touch a record high of $1,292.60 before retreating slightly.
The Fed’s intention to pump more money into the U.S. economy is encouraging investors to hold on to gold as a hedge against future inflation, a dealer at Lee Chong Gold Dealers told Regal Group International sources. "If the interest rate turned around, it would probably prompt people to dump gold and everything."
The ongoing weakness of the dollar after it hit a 7-week low against a variety of currencies is also a factor keeping the bullion price buoyant.
Analysts have indicated to Regal Group International that the long term prospect for gold remains bullish given the current economic uncertainties.
"Ultimately, the long term sentiment is bullish because there are uncertainties and people still prefer to keep gold as a hedge,” a dealer told Regal Group International sources. The precious metal is not likely to fall sharply in the absence of news of any significant upturn in the global economy.
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