Gold prices rally as Fed begin tapering, GBP/USD sinks as BoE keeps rates unchanged [Video]

Gold prices rally as FED begin tapering

Gold prices were up by as much as $30 in Thursday’s session, in the aftermath of the Wednesday’s FOMC meeting.

The Federal Reserve opted to keep interest rates unchanged, however the bank decided to begin tapering its COVID-19 asset purchasing program.

During Wednesday’s meeting, they confirmed that Treasury purchases will be reduced by $10 billion and mortgage-backed securities by $5 billion.

This decision comes as the U.S. economy has mostly recovered from the impact of the pandemic, enabling the Fed to remove this safety net, which was put in place as a result of the crisis.

XAUUSD hit an intraday high of $1,798, after trading at a low of $1,768. The S&P 500 also climbed to a record high.

GBPUSD sinks, as Bank of England keeps rates unchanged

In the United Kingdom, markets were left surprised as the Bank of England also opted to keep interest rates unchanged.

Many had anticipated the BOE would hike rates, in response to inflation rising to multi-year highs, and above the bank’s 2% target.

In a 7-2 vote, the MPC moved to keep the benchmark rate at 0.1%, leading to a huge drop in the cable rate.

GBPUSD fell to an intraday low of 1.3471, its lowest level since October 1st, after opening the session at 1.3684.

In addition to maintaining interest rates, a 6-3 vote saw the bank also decide to maintain its bond purchasing at a target of £875 billion.