Gold bounced resoundingly off the session low on Wednesday after the minutes from the latest Federal Reserve meeting indicated that the US central bank is not in a hurry to raise interest rates.
“Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time,” according to the minutes from the January 27-28 Federal Open Market Committee meeting released on Wednesday.
Based largely on this sentence, gold for April delivery on the Comex division of the New York Mercantile Exchange jumped from a six week low of $1,197.20 per ounce to $1,213.20 in a matter of minutes.
The members of the Fed’s policy board are locked in what’s become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first hike will happen sometime in the second half of this year.
Additionally, the Fed noted that inflation has declined further below the Fed’s longer-run objective of two percent, largely reflecting declines in energy prices; however, the FOMC added that survey-based measures of longer-term inflation expectations have remained stable.
“A few committee member expressed concern that in some circumstances the public could come to question the credibility of the Committee’s two percent goal,” the minutes said. “Indeed, one participant recommended that, in light of the outlook for inflation, the Committee consider ways to use its tools to provide more, not less, accommodation.”
In the wider-markets, the dollar was 0.27 percent stronger at 1.1382 against the dollar, while Dow Jones industrial average and S&P 500 were down 0.10 percent and 0.09 percent respectively.
As for the other precious metals, Comex silver for May delivery was up 16.0 cents at $16.470 per ounce. Trade has ranged from $16.620 to $16.275.
Platinum futures for April delivery on the Nymex were up $5.70 at $1,172.90 per ounce, while the most-actively traded palladium contract was at $778.00 per ounce, up $1.40.
In news elsewhere, Greece’s government said it will request a loan extension for up to six months on Thursday, although Germany said no such deal is on the table and the country must adhere to the terms of its original 240-billion-euro bailout, which is set to expire at the end of the month.
In economic data, January US building permits were an annualised 1.05 million units, its PPI fell 0.8 percent and housing starts were 1.07 million units – only the latter matched expectations, as the others were below forecasts. Also, the capacity utilisation rate of 79.4 percent and a 0.2-percent increase in industrial production were below market expectations.
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