The Federal Reserve’s decision to keep the interest rates at their current level has proved to be very beneficial for gold prices, as the precious metal reached its strongest level in nearly three weeks by the weekend.
COMEX, a division of the New York Mercantile Exchange, saw gold for December delivery go up by 1.86 percent, ending the week at $1,137.80 per troy ounce after peaking at $1,141.50 during Friday’s trading, the highest since September 1st. This shows a strong reversal from its recent three week decline.
The move by the Fed is thought to be bullish for gold, as it reduces the holding cost, even though it does not necessarily offer investors a guaranteed return. But with interest rates still close to zero speculation on gold offers a secure investment and a strong upside potential. With the rate unchanged, many who had reduced their holdings over the last two months expecting that the Federal Reserve would increase rates, are buying back in bring its value back from its near six year low of $1,072.30 in July.
Silver Rises, Copper Falls
COMEX also saw silver futures for December delivery grow by 1.19 percent during Friday, closing at $15.16 per troy ounce on Friday. For the week silver futures increased 64.4 cents or 4.58 percent, marking the largest increase in four months.
Unlike its more glamorous colleagues, Copper for December delivery went down by 2.69 percent on Friday, finally finishing at $2.386 per pound after hitting a low of $2.372, the lowest level in ten days. Overall, copper declined 2.64 percent last week, suffering from the assessment given by the Fed over the state of the global economy which made investors hesitant to hold their positions.
Considering that China accounted for nearly 40 percent of the world’s consumption of copper last year, fears of a global economic slowdown led by China has put copper futures under heavy selling pressure for several weeks and until the Fed pushes the button and raises rates or China shows some realistic positive signs, it is likely to remain depressed.