Gold futures were steady in the US on Thursday while market perceptions remain unmodified – the Chinese are still on the verge of implementing new stimulus measures while the Federal Reserve will wait until at least September to raise interest rates.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was unchanged at $1,208.70 per ounce. Trade has ranged from $1,207.00 to $1,212.40.
Although China’s HSBC flash manufacturing PMI at 49.1 missed the expected 49.4, the miss raised expectations that Beijing will roll out further stimulus measures to prop up growth rates.
The People’s Bank of China (PBoC) lowered interest rates for the third time in six months earlier in May, cutting both the one-year lending rate and the one-year deposit rate by 25 basis points to 5.1 percent and 2.25 percent respectively.
“Softer client demand, both at home and abroad, along with further job cuts indicate that the sector may find it difficult to expand, at least in the near term, as companies tempered production plans in line with weaker demand conditions,” HSBC/Markit said.
“On a positive note, deflationary pressures remained relatively strong, with both input and output prices continuing to decline, leaving plenty of scope for the authorities to implement further stimulus measures if required,” it added.
In other central bank news, yesterday’s release of the Federal Open Market Committee (FOMC) minutes from the April 28-29 meeting effectively ruled out a rise in interest rates in June, in line with market expectations, but it gave no clue on whether a rise from near-zero levels could happen in September, December or even in 2016.
“Although the reasons why the US economy got off to a weak start this year were discussed, as were the effects of the strong US dollar, the FOMC members did not appear unduly concerned,” Commerzbank noted.
“The Fed will continue to make interest rate hikes dependent on the data situation. The uncertainty over whether and when the Fed will raise interest rates is likely to keep the gold price in check for the time being,” the broker added.
The dollar has been volatile since the release of the FOMC minutes, seemingly unable to settle on a direction – it was last down slightly against the euro at 1.1134.
In data released so far today, the French flash manufacturing PMI was better than expected at 49.3 but the country’s flash services PMI disappointed at 51.6. Germany’s flash manufacturing PMI at 51.4 was lower than forecast, as was its flash services PMI at 52.9.
The eurozone flash manufacturing PMI was better than expected at 52.3 but its flash services PMI undershot at 53.3. The bloc’s current account was also lower than forecast at 18.6 billion euros.
Investors will now turn their attention to the US for initial jobless claims, existing home sales, the Philly Fed manufacturing index and leading indicators. As well, ECB president Mario Draghi and FOMC member Stanley Fischer are speaking.
As for the other precious metals, Comex silver for July delivery was up 5.2 cents at $17.165 per ounce. Trade has ranged from $17.080 to $17.250.
Platinum futures for July delivery on the Nymex were unchanged at $1,156.90 per ounce, while the most-actively traded palladium contract was at $778.85, up $2.00.
“The mood during London Platinum Week has been fairly lacklustre,” UBS analyst Edel Tully said. “A divergence in sentiment towards platinum versus palladium has been apparent over the past few days: while the market seemingly remains upbeat on palladium’s prospects, we think outlooks for platinum are not quite as promising.”
“Indeed, we detected a hint of gloominess in the air when platinum was the topic of conversation, and this was accompanied by some indications of frustration and confusion over the metal’s price action over the past year or so,” she added.
(Additional reporting by Ewa Manthey, editing by Mark Shaw)
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