Money and Metals

The Federal Reserve held rates stready today. "The Fed's Open Market Committee kept the nation's benchmark rate unchanged at 5.25 percent for a third straight meeting, but it noted that recent readings on inflation have moved higher recently. There may have been some disappointment on Wall Street because 'it's not a sign that the Fed is going to be cutting rates anytime soon,' said Drew Matus, senior economist at Lehman Brothers."

"Oscar Gonzalez, an economist with John Hancock Financial Services, said the Fed was likely to remain on hold for 12 months. 'They are aware that there is an inflation risk but they are not committed to raising rates at this point given the information that the economy really is slowing down. The policy is to wait and see what the data tells us,' said Gonzalez. The dollar extended losses as the Fed was not seen as ratcheting up its inflation worries."

"'The bottom line is that the statement had a hawkish tone,' said Mike Moran, chief economist for Daiwa Securities America. 'They are not considering easing monetary policy at this time (but) I think it's likely they will have to tighten again sometime in 2007.'"

"Gold future extended their gains above $590 an ounce in after-hours trade Wednesday, as traders reacted with relief to the Federal Reserve's decision to leave rates unchanged but continue to drive home its anti-inflation message."

"Meanwhile, the dollar extended its losses against major rivals after the Fed decision. Policymakers were expected to leave interest rates unchanged at 5.25% but the central bank kept the door open for further increases if inflation heats up."

"James Moore, analyst at TheBullionDesk.com in London, said that from a technical standpoint, gold is finding physical support during dips, while investment funds are selling into rallies, 'but the short-term trend remains one of weakness with gold requiring a rally through $608 to confirm a break-out on the charts,' he said."

"Other metals were mixed earlier. Silver futures closed up 4 cents to $11.89 an ounce, platinum was up $5.90 at $1,069 an ounce and palladium rose 10 cents to $323.10 an ounce."