The Federal Reserve did not launch a third round of quantitative easing (QE3) at its Federal Open Market Committee (FOMC) meeting today, but did extend the timeframe for near-zero interest rates from mid-2013 to late-2014.
In addition, the tone of the Fed statement was a bit more dovish than that from last month’s meeting. Specifically, the latest statement said that “the Committee expects to maintain a highly accommodative stance for monetary policy” – which was language not included in the prior statement.
Another key difference was that the one dissenting vote came from a hawkish rather than dovish member. Last month, Charles Evans dissented because he supported “additional policy accommodation.” This time, Jeffrey Lacker “preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.”
Fed Chairman Ben Bernanke will hold his third-ever post-FOMC press conference at 2:15pm ET today.
Following the release of the Fed statement, gold futures turned sharply higher. The yellow metal had already pared its losses by climbing back from $1,649.20 to $1,658 prior to the announcement, and subsequently rallied above $1,670 per ounce.
Gold shares bounced back as well, with the Market Vectors Gold Miners ETF (GDX) recovering from earlier losses to trade higher by $0.43, or 0.8%, at $52.25 per share.
The rebound in gold coincided with a move lower in the U.S. dollar, which relinquished its gains against a basket of foreign currencies.
The full Fed statements is available below:
http://www.federalreserve.gov/newsevents/press/monetary/20120125a.htm
Premier Gold Expands High-Grade Zones at Trans-Canada Project
- Four zones are currently being drilled including the HGN, F2, North Shear and Key Lake (West Extension)
- The HGN and F2 zones are located proximal to the historic mine workings and remain open both up and down plunge
- The North Shear is a new discovery located between the Hardrock and Little Long Lac Mines and the West Extension target is a high grade target along strike from the Key Lake deposit that was acquired through Premier's acquisition of Goldstone Resources earlier in 2011
- These zones have characteristics similar to the high-grade past producing Little Long Lac (600,000 ounces gold produced at a grade of 11.7 grams per tonne) and Leitch (847,900 ounces produced at a grade of 31.5 grams per tonne) Gold Mines that are located on the Trans-Canada Project
