The gold price made gains in early trading on Thursday following dovish comments from the US Federal Reserve, reversing a fall below $1,200 in the previous session.
Spot gold was last at $1,219.00/1,219.80 per ounce, up $6.60 on Wednesday’s close and after touching a six-week low in the previous session at $1,197.70 prior to the release of minutes of the US central bank’s last meeting, which indicated that it is in no 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.
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 move will be made in the second half of this year.
Additionally, the Fed noted that inflation has declined further below its 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.
The minutes pushed gold back above $1,200 mark, a trend that has continued into today although news that Greece has officially applied for a six-month extension on the loan agreement, Eurogroup president Jeroen Dijsselbloem said on social media platform Twitter, will be playing on its safe-haven status.
The loan agreement would be separate from the current 240-billion-euro bailout that expires at the end of the month and would therefore not carry the heavy austerity conditions included in the original facility.
According to AFP, the Eurogroup will meet on Friday to discuss the proposal.
In data today, the French CPI at -1.0 percent was worse than expectations at -0.9 percent, while the eurozone current account at 17.8 billion euros also fell short of consensus. Weekly unemployment claims out of the US and the Philly Fed manufacturing index are due later
In other gold news today, India’s central bank has removed a ban on the import of gold coins and medallions, it said. Nominated banks are now permitted to import gold on a consignment basis, although all domestically sold gold will be against upfront payment.
Other metals were also bolstered – silver was last 11 cents higher at $16.58/16.63 per ounce, while platinum recovered from six year lows to $1,176/1,181, up $9. Palladium at $773/779 was up $1.
(Additional reporting by Tom Jennemann, editing by Mark Shaw)
The post Gold price recovers from below $1,200 on dovish US Fed minutes appeared first on The Bullion Desk.
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