Gold in negative territory after FOMC’s decision

Gold prices are holding steady but remain in negative territory as the Federal Reserve said it will taper monthly bond purchases.

FOMC decided to begin tapering by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities.

Along with the tapering announcement, the Federal Reserve also kept interest rates unchanged at the zero-bound range, in line with market expectations. Markets continue to price in a rate cut by June 2022.

The path of the economy continues to depend on the course of the virus. Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation,” the committee added.

Gold prices last traded at $1,765.10 an ounce, down 1.32% on the day. Tapering pace indicates that the process will be finished by mid-2022. This sets the scene for the central bank to raise interest rates twice next year.

Despite the Fed’s tapering move, it will not be in any hurry to raise interest rates until early 2023 according to major economists.