Gold Steamrolls Higher Despite Fed Hawk
Gold prices continued to surge Thursday despite hawkish rhetoric from a Federal Reserve official.
A day after two of her colleagues suggested that further interest rate hikes could hurt the economy, Cleveland Federal Reserve President Loretta Mester said exactly the opposite.
“In my view, if economic conditions evolve as anticipated, I believe further removal of accommodation via gradual increases in the fed funds rate will be needed and will help sustain the expansion,” she said.
Still, gold hit fresh yearly highs due to a weak dollar and mounting geopolitical tensions.
Dec. gold gained $11.30, or 0.8%, to settle at $1,350.30/oz, the highest in just over a year.
In economic news, the Labor Department released a report showing a sharp increase in first-time claims for unemployment benefits in the week ended September 2nd.
With Hurricane Harvey hurting Houston, initial jobless claims jumped to 298,000, an increase of 62,000 from the previous week's unrevised level of 236,000. Economists had expected jobless claims to rise to 241,000.
The European Central Bank today kept all three of its interest rates unchanged and said it expects rates to remain at their current levels for an extended period of time.
The central bank also confirmed that its net asset purchases are intended to run at the current monthly pace of 60 billion euros until the end of December, or beyond, if necessary.
ECB President Mario Draghi's subsequent press conference was seen as dovish, as he said inflation is still expected to move towards the bank's target but warned downside economic risks continue to exist.