This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Gold Prices Climb on New Fed Stimulus (Update 1)

Stocks in this article: ABXGGAUYIAUGLDNEM

Updated from 12:08 p.m. EST with Fed policy announcement and settlement prices

NEW YORK ( TheStreet) -- Gold prices climbed Wednesday as the Federal Reserve announced it would purchase longer-term Treasury bonds and attached a specific unemployment rate target to end the current federal funds rate.

Gold for February delivery added $8.30 to settle at $1,717.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,725 and as low as $1,708.50 an ounce, while the spot price was ticking up $1.10, according to Kitco's gold index.

The Federal Open Market Committee -- the policy-making arm of the central bank -- said it would begin to purchase $45 billion of longer-term Treasury bonds per month for an open-ended period, and that it would keep rates low at least for as long as the U.S. unemployment rate remained above 6.5%. The new stimulus would replace Operation Twist, which concludes by the end of 2012.

The central bank said it would maintain the monthly $40 billion open-ended, mortgage-backed security purchasing program it implemented in September.

An increasing number of economists and analysts had predicted that the Fed would implement some sort of increase in monetary stimulus in the latest Federal Open Market Committee (the Fed's policy-making arm) meeting.

"I think there's going to be an extension of either the Operation Twist or expanding the balance sheet to purchase long-term treasuries," said Jeb Handwerger, editor of GoldStockTrades.com. "So we think that the Fed is going to do whatever it can, including a fresh round of bond buying, to support the economic recovery."

Silver prices for March delivery jumped 77 cents to $33.78 an ounce, while the U.S. dollar index was shedding 0.32% to $79.79.

Gold prices climbed on Monday as investors bought into new positions on speculation that the Fed would implement additional easing for its latest policy meeting.

More easing by the central bank may be viewed as an inflationary action, which would make gold an appealing hedge.

"I think more easing will help to increase the sentiment towards gold; I think now that gold tested the bottoms in the $1,680s an ounce ... what you're going to want to see now is if there's any kind of a catalyst to get people jumping back in, pushing that metal higher," said David Banister, chief investment strategist at TheMarketTrendForecast.com.

The yellow metal continued to keep an eye on so-called fiscal cliff discussions, but appeared to be little changed by Tuesday's roller coaster reports. Early market sentiment fueled the major U.S. indices to a decent rally for most of the day until Senate Majority Leader Harry Reid emerged to tell reporters that he believed it would be extremely difficult to reach an agreement before Christmas.

President Barack Obama and House Speaker John Boehner have remained quiet about details of their latest meetings.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs