Gold price supported, investors look ahead to Fed mins

Otmane El Rhazi from The Bullion Desk.

The gold price made modest gains early on Wednesday ahead of the minutes of the US Fed’s March meeting.

Spot gold was last at $1,210.00/1,210.90 per ounce, up $1.20 on Tuesday’s close and having traded in a tight $5 intraday range so far. Silver edged three cents higher to $18.83/18.88.

There is support for gold around $1,210 despite the dollar’s steady recuperation following the poor jobs numbers late last week – the greenback is so far up around 1.3 percent for the week against the euro, with the forecast-missing non-farm payrolls number seen as likely to delay to a rise in interest rates.

“The ability of gold to stay above $1,200 in the face of the dollar recouping post nonfarm payroll losses is impressive. This leads us to think that bullion may stabilize and hold, with the market consolidating from recent gains,” HSBC’s James Steel said.

Providing support was a suggestion from Minneapolis FOMC president Narayana Kocherlakota that it would be appropriate for the Fed to defer any rate rise until the second half of 2016.

While Kocherlakota is not a voting member on the FOMC this year, such comments in the wake of the disappointing March jobs report may have provided fuel for investors in the camp for a delay, Steel noted.

Investors will now look to today’s minutes from the March 17-18 Fed meeting for further clues on when a rise may occur and a top-level perception of the US economy.

Previously, slack in the labour market and stagnant inflation has steadied the hand of the Fed so any insight into some of these areas showing signs of improvement may see bullion heading back towards $1,200.

Last month, the Fed removed the word “patient” from its statement on monetary policy measures but signalled that an increase was unlikely at the next two policy meetings.

In other data already released, German factory orders at -0.9 percent were worse than expected, while the French trade balance at -3.4 billion euros bettered consensus. Still to come are eurozone retail sales figures and crude oil inventories.

The PGMs are showing signs of improvement following suggestions from Norilsk Nickel, the world’s largest palladium producer, that South African PGM output may decline in the next few years.

Furthermore, South African power producer Eskom recently warned of rolling blackouts because there is not enough electricity to meet demand.

Palladium was last $5 higher at $767/773 per ounce and platinum was up $4 at $1,171/1,176.

(Editing by Mark Shaw)

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