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 Gold edged higher with the Fed's move largely expected, having built
up on a recent raft of strong U.S. economic data, and most investors
in bullion have already cut positions long before Wednesday's
stimulus decision.
The Fed's move to wind down the era of cheap money sent the dollar
sharply higher, trading at five-year highs against the yen, and
would have typically dragged down commodities priced in the
greenback. But the sell-off that many had feared did not happen,
with Asian shares rising on the Fed's commitment to keep interest
rates low.
"It wasn't a surprise anymore. The surprise would have been if no
taper would have come," said Dominic Schnider, analyst at UBS Wealth
Management.
"It's really this statement that the economy is on track which is
giving everybody quite a bit of hope."
The Fed cut the rate of its monthly bond purchases by $10 billion to
$75 billion, confident that the U.S. economy was strong enough for
it to scale back its stimulus, which has fed liquidity in markets
for years and helped commodities race higher.
Brent crude for February delivery was off 26 cents at $109.37 a
barrel by 0304 GMT. The oil benchmark gained more than a dollar on
Wednesday as investors shrugged off the Fed's move.
"Markets were worried that speculative money was going to come out.
But what the Fed announced was an incremental change rather than a
huge change," said Tony Nunan, oil risk manager at Mitsubishi Corp
in Tokyo.
"The Fed had also said they would not taper till they were sure the
economy could handle it. That, and supply worries are supporting
prices."
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U.S. crude was little changed at $97.72 a barrel, after rising by 58
cents in the prior session.
Data showing a bigger than forecast drop in U.S. crude stockpiles
last week, including a decline in inventories at the storage hub in
Cushing, Oklahoma helped underpin crude prices.
Spot gold rose 0.1 percent to $1,219.21 an ounce. Bullion slipped to
a 1-1/2-week low of $1,215.70 on Wednesday, defying expectations of
some in the market that prices could fall sharply on the Fed's
bond-buying cut.
"The speculative community was already positioning to tapering so
that's why the impact wasn't that big," said UBS's Schnider.
Three-month copper on the London Metal Exchange was off half a
percent at $7,231 a tonne, with sustained drawdowns on LME
warehouses keeping losses in check.
(Reporting by Manolo Serapio Jr..;
editing by Michael Perry)
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