Futures & Commodities

Gold rises to another record after Fed leaves rates near zero

A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.
JOEL SAGET| AFP via Getty Images

Gold prices climbed higher to a record on Wednesday after the Federal Reserve officials left their benchmark interest rate unchanged near zero.

Spot gold gained 1% to $1,979.53 per ounce, while U.S. gold futures rose 0.4% to $1,953.4 per ounce, a new record close.

A Reuters tally showed more than 16.62 million people were infected with COVID-19, including 655,583 deaths. Cases continued to surge in the United States, with four states in the South and West reporting one-day records for virus-related deaths on Tuesday.

Underscoring the economic impact from the virus, data on Tuesday showed that U.S. consumer confidence fell more than expected in July.

Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. Gold is also seen as a hedge against inflation.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.7% to 1,243.12 tonnes on Tuesday.

Meanwhile, Republicans in the White House and the U.S. Congress were in disarray over their own plan for providing $1 trillion in new coronavirus aid, as negotiations aimed at reaching a compromise bill with Democrats also sputtered.

Asian equities pulled backed on Wednesday as an impasse in U.S. economic stimulus negotiations pushed global stocks lower.