Gold surges as U.S. Fed signals economic worries

08:36, June 23, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange gained for the seventh consecutive session on Wednesday, as the U.S. Federal Reserve noted its concern over the pace of U.S. economic growth and announced its decision to keep lending rate at an all-time low.

The most active gold contract for August delivery added 7 dollars, or 0.5 percent, to 1,553.4 dollars per ounce.

The Federal Reserve on Wednesday lowered its forecasts for U.S. economic growth, but offered no hint of further monetary support, noting the 600 billion dollar bond-buying program dubbed as QE2 would end as planned. The Fed also decided to keep its targeted Fed funds rate at a historic low between 0 percent and 0.25 percent.

A trader mentioned that investors scrutinized the Fed's statement for indications of possible changes to the current monetary policy, and anything that doesn't lead to higher interest rate offer a boost to gold by keeping the opportunity cost of holding bullion low.

Analyst mentioned gold gave back some earlier gains before close as there's barely anything new in Fed's statement.

Silver for July delivery rallied 36 cents, or 1 percent, to 36. 739 dollars per ounce.

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