Gold and Silver Price Update-Fed’s Decision of Low Interest Rates Increases Demand for Gold

Gold and silver recorded considerable gains after the Fed announced its plans of maintaining low interest rates in order to spur the US economy towards recovery. Gold future advanced by 0.91 percent to USD $ 1530.90 an ounce, while silver future advanced by a massive 4.81percent to be at USD $ 48.20 an ounce.

The Fed’s decision of maintaining overnight lending rates to banks between 0 and 0.25 percent is expected to cause further depreciation to the value of the Greenback. The Dollar Index, which measures the value of the US Dollar against six other major currencies, declined to its lowest level since July 2008. Investors fear that the Dollar shall depreciate even further. This fear has increased the demand for gold as a safe-haven to protect their investments against further debasements in the Greenback. Along with this factor, concerns about the European Union’s sovereign debt levels, Japan’s reconstruction progress after the earthquake, and US Sovereign debt levels have also contributed to the increased demand for gold which have ultimately led to its price hike.