FRANKFURT (MarketWatch) — Gold futures soared to new heights above $1,290 an ounce on Wednesday after the U.S. Federal Reserve signaled it may take further quantitative-easing measures to support the recovery and stave off deflation.
The U.S. dollar, meanwhile, came under heavy selling pressure against its major rivals in the wake of the Fed’s latest policy announcement.
Gold for December delivery /quotes/comstock/21e!f:gc\z10 (GCZ10 1,296, +21.20, +1.66%) hit an intraday high of $1,296.50 an ounce in electronic trading on Globex.
The contract recently gained $19, or 1.5%, to $1,293.30 an ounce.
“A new day, a new record high – that essentially describes the situation on the gold market at the moment,” Commerzbank said in a note to clients.
During the regular trading session Tuesday, December gold futures finished lower, marking their first down day in four. Gold on Monday had hit a fresh record, settling at $1,280.80 an ounce. See Tuesday’s Metals Stocks column.
After regular trading closed, the Fed signalled it would be willing to take additional steps to boost the faltering U.S. economic recovery and to ward off deflation.
The central bank’s words have largely been interpreted to mean that it will likely take further quantitative-easing measures late this year.
Gold prices rallied in the aftermath of the Fed statement, while the dollar fell sharply.
Gold and the dollar have a strong inverse relationship; when the dollar falls, gold tends to gain.