Gold Responds Well to Federal GuidanceAuthor: David GoldsteinLast Updated: December 19, 2014 After the Federal Reserve Bank stated it would remain patient in raising interest rates, the price of gold rose. As a result, both commodities and the stock market were boosted although pared early gains while the US dollar strengthened compared to several other currencies.Janet Yellen, chairwoman for the Federal Reserve, said that interest rates would probably not increase for at least a few more meetings, which would put the timeline around April of 2015 at the soonest.When interest rates increase the chance for cost of holding non-interest bearing assets to include gold goes up along with the dollar, where metal pricing resides.Caroline Bain, economics analyst said that the Federal Reserve’s statement suggests there is no rush to increase interest rates. Therefore, it is the belief that there will be an increase sooner than later but that any rise will occur slowly and gradually.By mid-afternoon, spot gold was up 0.6% at $1,195.11 per ounce. Spot gold had risen earlier to a high of $1,212.80, following the trigger of buy stops on a break at the $1,200 level.As the dollar index shows strength but also weakness for currencies in Hungarian, East Europe, Venezuela, and Argentine, excluding the Russian ruble, gold is paring gains, this according to George Gero, precious metals strategist for New York’s RBC Capital markets.Settling up 0.03% at $1,194.80 per ounce is US February gold. There were also advances in other precious metals to include spot silver that climbed 1.1% to $15.86 per ounce, which earlier had risen 3.4%, climbing to a high of $16.22 per ounce.There was a rally among global equities markets with Wall Street up over 1% for a second consecutive day with investor response following the altered change by the Federal Reserve to keep interest rates close to zero for a considerable time. However, as the US considers its next interest rate increase there was a more cautious tone.ING, a Dutch bank, said yesterday the Federal Reserve did a good job in putting distance between itself and the forward guidance of “considerable” while not getting local equity markets upset.At the biggest Wall Street banks, economists remain convinced that rates will increase by June of next year. They also believe there will be limits specific to gains in gold while expectations are unchanged that rates will go up sometime next year.As the dollar index strengthened, precious metal gave up gains. Spot platinum climbed 0.7% to $1,195 per ounce while at the same time, spot palladium increased 2.1% to $792.10 an ounce.