Gold hits record high of $1,800; Fed expects zero interest rates until mid-2013

Michael Allan McCrae | August 9, 2011 | 9:49 pm Precious Metals Europe Gold

Gold hit $1,800/oz on Tuesday and closed the day at $1,743/oz due to ongoing turbulence in the financial markets

According to MarketWatch, gold has gained 23% this year and has risen 5.5% alone this week.

The Federal Reserve, which met Tuesday morning, issued a statement expressing surprise at the slow economic growth.

“Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed,” said the Fed in a statement.

Due to the weakness in the recovery, the Fed expects to keep interest rates near zero percent through mid-2013.

The Fed expects long term inflation to remain stable. It acknowledged that inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, but it noted that prices have recently declined.