Gold for February delivery rose $8.3 (0.5%) to settle at $1,717.9 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Prices shed 0.4% last week. Prices rose to a high of $1,725 during intra day trading.
On Wednesday, March silver rose 77 cents, or 2.3%, to settle at $33.78 an ounce.
The Federal Reserve said Wednesday that it decided to end its "Operation Twist" program but extend its long-bond-buying program to the tune of $45 billion a month. This is what many had reckoned the central bank would do. The FOMC also said it will begin tying interest rate policy to the U.S. unemployment rate, saying as long as unemployment is above 6.5%, rates will not rise. Wednesday's Federal Reserve developments were bullish for the raw commodity markets.
In details, the central bank said it would add $45 billion in Treasury-note purchases to its $40 billion-a-month purchases of mortgage-backed bonds. The Fed also said it would keep official rates near zero so long as the unemployment rate remains above 6.5% and inflation is not forecast to rise above 2.5%.
In overnight news, European stocks and the Euro currency were firmer on ideas the FOMC would implement further easing of U.S. monetary policy. News that Greece did meet its target number for the buying back of its bonds also supported the European markets. Euro zone leaders meet again on Thursday to discuss disbursing more aid to Greece.
Also in the U.S., attention of the market place remains on the "fiscal cliff" tax increases and spending cuts that is fast approaching.
The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Wednesday.
Among economic data expected for the day, the Commerce Department in US reported that import prices fell 0.9% in November on the back of lower fuel prices. Nonfuel import prices also declined, with prices falling across a broad range of categories. Export prices, excluding agriculture, decreased by 0.7% in November after they had increased by 0.2% in the prior month. Excluding oil, import prices decreased by 0.2%, which follows the 0.3% increase experienced in the prior month.
Seapartely, the November Treasury budget showed a $172.1 billion deficit, which was wider than the deficit of $172 billion expected.
At the MCX, gold prices for February delivery closed higher by Rs 21 (0.06%) at Rs 31,397 per ten grams. Prices rose to a high of Rs 31,490 per 10 grams and fell to a low of Rs 31,300 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed higher by Rs 900 (1.4%) at Rs 63,224/Kg. Prices opened at Rs 62,359/kg and rose to a high of Rs 63,440/Kg during the day's trading.
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Lower dollar and expectation of easy-monetary policies boost prices