Gold and silver posted strong gains on Monday after weak US data pressured the greenback lower, supporting gains in precious metals across the board. The complex pulled back on some of the gains during the Asian trade today, as market shifts the attention towards the release of the FOMC statement on Wednesday.
Spot gold was last at $1,201.20, trading just about 70 cents lower than where it ended on Monday. Silver is also lower by $0.05 to $16.34 per ounce.
The main factor in the stronger tone was a decline in the dollar – the dollar index ended the day at 96.89 after opening at 97.36. It was last seen lower at 96.80, not far from its three-week low of 96.63.
Dollar’s move lower overnight was influenced by forecast-missing data – the US flash services PMI missed consensus at 57.8, though the number still suggests a sustained upturn in US service sector output. But it follows poor durable goods orders data on Friday at -0.2 percent.
For the week ahead, markets will closely watch Wednesday’s FOMC statement. While higher interest rates are not yet expected, comments from Fed chair Janet Yellen regarding any forward guidance will be looked to.
“The USD’s reaction to the FOMC should be a function of whether the market adjusts its expectations on the timingor pace of tightening, said HSBC’s G10 FX Strategist Robert Lynch. A USD rally from a more hawkish FOMC statement would be negative for gold while a USD decline from a more dovish FOMC statement would be positive for bullion, said a research note from HSBC.
Meanwhile, investors will also pay attention to the Greek debt situation, given that PM Alexis Tsipras decided to reshuffle the bailout team which will see Finance Minister Yanis Varoufakis playing a lesser role after three months of fruitless negotiations.
The PGMs followed gold lower today – platinum was last down $7 at $1,131 per ounce while palladium slipped $4 at $774.
The post Gold above $1,200, eyes on FOMC statement appeared first on The Bullion Desk.
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