XAU / USD Stable Near $ 1,950 After Fed Decision

• Gold is stable at seven-week highs at $ 1,950 following the Fed’s decision.
• The Federal Reserve keeps rates unchanged and is committed to an accommodative policy

Gold futures they are stable at seven-week highs at $ 1,950 after the Federal Reserve published its monetary policy decision. The yellow metal rallied on Thursday amid strong appetite for risk, with equity markets rising and the USD declining.

Fed takes a wait-and-see stance

The Federal Reserve has kept its Fed funds rate unchanged in the range of 0% – 0.25% as widely expected on Thursday and reaffirmed its commitment to supporting the US economy by “promoting its maximum employment targets and price stability “against the impact of the COVID-19 pandemic.

The bank says that economic activity and employment levels have continued to recover although they remain at levels well below those of the beginning of the year, while lower consumer demand and the drop in oil prices are holding back inflation by consumer.

In addition, the monetary statement warns that the coronavirus crisis will continue to weigh on economic activity, employment and inflation in the short term, representing a significant risk to the medium-term economic outlook.

In this scenario, the Fed assures that interest rates will remain close to zero “until labor market conditions reach levels consistent with the assessments of the Maximum Employment Committee and inflation rises to 2%.”

Beyond that, the Bank shows its willingness to increase its holdings of Treasury Securities, at least at the current rate, to keep the market functioning properly and support the flow of credit to households and companies.