BU: GOLD STEADIES AFTER HEAVY SELLOFF, FOMC MINUTES DUE TODAY
Gold futures were hovering near the previous settlement as market participants await indications on the future of US monetary policy.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down $1.30 or 0.1 percent to $1,206.90 per ounce. Trade has ranged from $1,196.20 to $1,212.70.
After a volatile start to the new year, investors await the Federal Open Market Committee’s (FOMC) minutes from the January 26-27 meeting, hoping to glean information on the policy-board’s decisions moving forward.
In a congressional hearing last week, chairwoman Janet Yellen said the organisation would reverse course if the global risks threatened the US recovery.
The policy-board’s original plan was to raise rates four times in 2016, but with the latest global equity rout, investors don’t expect another rate increase till the second half of next year.
“We no longer expect the Fed to raise interest rates again in 2016,” Georgette Boele, a strategist at ABN AMRO, said. “We think it will only resume its rate hike cycle once economic growth strengthens and the economy has absorbed the past tightening of financial conditions.”
Last week, gold reached the highest price since last summer as looser monetary policy and jittery markets combined to aid the precious metal.
However, the price appears to be consolidating in the near-term while investors seek fresh catalyst and lock-in profits.
“Gold is consolidating – upside strength has waned after its strong run higher,” Tom Moore, an analyst at FastMarkets, said. “Profit-taking appears to be the cause and, with signals of sustained support, there are indications that this remains consolidation while the metal catches its breath rather than a reversal.”
Meanwhile in spec positioning, gold ETFs continue to see inflows but the rate appears to be slowing, with only 2.43 tonnes added yesterday, reflecting reduced upside expectations.
In a packed data day, US Building Permits in January were 1.2 million, a touch below the forecast of 1.21 million. PPI and Core PPI month-over-month were up 0.1 percent and 0.4 percent respectively, both missing the estimates of -0.2 percent and 0.1 percent.
Unfortunately, housing starts in January came in at 1.10 million, a stark divergence from the economic consensus of 1.16 million.
Later, capacity utilization rate and industrial production are set for release.
Turning to wider markets, Germany’s DAX and France’s CAC-40 were up 2.1 percent and 2.2 percent respectively, while the dollar was trading 0.2 percent stronger at $1.1127 against the euro.
As for other precious metals, Comex silver for March delivery less than one cent or 0.1 percent to $15.330 per ounce. Trade has ranged from $15.190 to $15.370.
Platinum for April settlement rose $5.40 or 0.6 percent to $942.70 per ounce, while the most-actively traded palladium contract stood at $512.60 per ounce, up $3.00.
