Gold Prices Surge on Fed Promise to Keep Rates Low

Gold prices jumped Thursday after the Federal Reserve surprised markets by saying ultra-low interest rates will continue through 2014.

The U.S. central bank said Wednesday it would keep interest rates at near zero longer than investors around the world were expecting.

The announcement, which followed two days of meetings of a key Fed committee supercharged stocks and commodities, especially precious metals.

Gold achieved a price breakthrough that bodes well for more gains.

Yesterday, gold traded through (its 100-day moving average), $1,685 then, and, more importantly, closed above it, UBS analyst Edel Tully said Thursday in a note.

This week's important technical development has been the break of trendline resistance drawn off the Sep. 6 high of $1,921.17. The line was cleared yesterday following the move through $1,671.65 which is where the trendline intersected. Key near-term support is at $1,649.23 and the focus is on $1,755.65 next, the Dec. 8 high. Our one-month forecast (which we have stubbornly held on to for some time) now doesn't look too extreme at $1,775.

The Fed's announcement hammered the dollar. The Dollar Index, which measures the greenback against a basket of major currencies, was down 0.6 percent to 79.25. The euro rose to nearly $1.32.

News of the more easy money from the U.S. central bank also energized equities.

Asian stocks were mostly up. Hong Kong's Hang Seng jumped 1.6 percent, while Japanese stocks slipped on profit-taking from recent gains and South Korea's main equity edged slightly higher on weak economic data.

European stocks all surged. Britain's FTSE 100 was up 0.9 percent, Germany's DAX gained one percent and France's CAC 40 increased 1.1 percent.

In the U.S. Futures for the Dow Jones Industrial Average, the Nasdaq 100 and the S&P 500 indicated a mixed opening, with optimism over the Fed's announcement offset by more fears of a Greek default.

Copper jumped 1.7 percent and crude oil climbed 0.6 percent to within a penny of $100

Gold for February delivery was up $15.70 to $1,715.80, while spot gold rose $59.60 to $1,716.43.

Silver for March delivery increased 27 cents to $33.40, while spot silver was climbed $1.54 to $33.41.