Gold and silver prices sharply up in midday U.S. trading Thursday, in the aftermath of surprisingly dovish rhetoric on U.S. monetary policy from the Federal Reserve. February gold was last up $56.50 at $2,054.00. March silver was last up $1.579 at $24.505. (Gold and silver futures prices had officially settled before the FOMC meeting concluded Wednesday afternoon. Thus, the big gains noted in today’s prices.)

The marketplace got a dovish surprise from the Federal Reserve Wednesday. While the Federal Open Market Committee (FOMC) left interest rates unchanged, the committee and Fed Chairman Jerome Powell pivoted from their heretofore hawkish rhetoric of a tight monetary policy and toward loosening policy, including future interest rate cuts. The Fed’s “dot plots” now indicate three interest rate cuts (totaling 0.75%) in 2024. Markets cheered the Fed news as the U.S. stock indexes hit new highs for the year, gold prices soared back above $2,000, the U.S. dollar index dropped sharply and Treasury yields declined. The benchmark 10-year note yield dropped below 4%. The now much-improved risk appetite in the general marketplace should work to support further gains in equities and commodity markets for at least the near term. A Barrons headline today reads: “Markets rejoice as Fed doves take flight….”

The Bank of England kept its monetary policy steady at its regular meeting Thursday, as expected. The European Central Bank also kept its policy steady, but ECB President Christine Lagarde still sounded a hawkish tone in her press conference.

A stronger-than-expected U.S. retail sales report this morning did not support the Fed’s monetary-policy-easing rhetoric Wednesday afternoon, and that likely helped to push gold and silver prices down from their daily highs.