Gold prices were under pressure during Thursday morning bullion trading in Europe, back below the pivotal $1,200 level after yesterday’s mildly hawkish minutes from the March meeting of the US Federal Open Market Committee (FOMC) underpinned the dollar, traders said.
Gold dropped to a two-week low of $1,192.80 at one point and then held around $1,196.10/1,197.10 per ounce, down $5.90 from the Wednesday close. Silver slipped to a three-week low, while the main PGMs drifted to their softest for around one week.
“The entire precious metals complex was pressured by dollar strength,” broker ANZ said.
The US currency touched a one-week best against the euro at 1.0730 and was recently around 1.0750.
“The near-term outlook for gold looks weak, with the path of least resistance lower. In addition to the bearishly interpreted FOMC minutes, the oil market sank,” HSBC’s James Steel said in a report
The market focussed on the text of the FOMC minutes and specifically at any hints on the timing of the first rise in US interest rates from near-zero levels for almost a decade.
“Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting,” the minutes said.
“However, others anticipated that the effects of energy price declines and the dollar’s appreciation would continue to weigh on inflation in the near term, suggesting that conditions likely would not be appropriate to begin raising rates until later in the year, and a couple of participants suggested that the economic outlook likely would not call for liftoff until 2016,” they added.
The current market consensus is that the first increase will happen sometime in the second half of this year.
For gold, physical buying may not be sufficiently powerful to push prices higher in the near term, HSBC’s Steel said.
Physical demand from the world’s second-biggest gold consumer, China, appears to be tepid – the premium for physical gold at the Shanghai Gold Exchange held just above par with the global spot benchmark, he noted.
“With persistent ETF outflows and a bearish medium-term technical picture it feels only a matter of time before the influential selling comes back into play,” broker Triland Metals said.
In the others, silver hit $16.23 per ounce and was recently quoted at $16.27/16.32, a 26-cent loss. Platinum at $1,158/1,163 was $6 lower, with palladium $3 easier at $753/759.
(Editing by Mark Shaw)
The post Gold struggles near two-week lows, dollar strength weighs appeared first on The Bullion Desk.
No comments:
Post a Comment