Comex Dec Gold Hits Record High In Wake Of FOMC Statement

By Allen Sykora Of DOW JONES NEWSWIRES Gold futures hit a fresh record high in the wake of a post-meeting statement from the Federal Open Market Committee on ideas that interest rates won't be going up any time soon. Around 3:05 p.m. EST (2005 GMT), December gold was at $1,095.40 an ounce, compared to $1,089.80 several minutes ahead of the FOMC release and a pit settlement of $1,087.30. December silver was at $17.515, up from $17.41 ahead of the FOMC statement and a pit settlement of $17.405. "The fact that everything remains the status quo is a positive environment for gold," said Dave Meger, director of metals trading at Vision Financial Markets. There had been some worries that the Fed might change its rhetoric enough to be seen as signaling a hint of possibly tightening interest rates down the road. "Any type of tilt to that effect could have supported the dollar and hence dented the gold price," Meger said. "Obviously that didn't happen. So any expectations to that effect are no longer a concern and that obviously gives a green light to the gold market to continue forward." Instead, the FOMC statement said conditions "are likely to warrant exceptionally low levels of the federal-funds rate for an extended period." The euro has firmed to $1.4889 from $1.4855 shortly before the FOMC statement. December gold since peaked at $1,097.80, an all-time high for a Comex most-active contract. Gold was initially tentative after the FOMC statement, which might have been "buy-the-rumor, sell-the-fact" trading, said Adam Klopfenstein, senior market strategist with Lind-Waldock. Still, the positive sentiment remains intact, he said, and prices eventually moved higher. The after-hours activity came after gold earlier extended the Tuesday and overnight record highs during open-outcry hours. Traders at the time linked this largely to technically oriented follow-through buying a day after the market surged sharply on news that the Reserve Bank of India has bought 200 metric tons of the 403.3 tons the International Monetary Fund was planning to sell in order to fund lending programs for poor countries. -By Allen Sykora, Dow Jones Newswires; 541-318-8765; allen.sykora@dowjones.com