Gold prices fell moderately on the release of the Federal Open Market Committee (FOMC) minutes, which likely push an interest rate hike to September or later.
Gold futures for July delivery on the Comex divison of the New York Mercantile Exchange were last up $2.60 to $1,209.30 per ounce, down from the pre-FOMC level of $1,212.30. Trade has ranged from $1,202.7 to $1,213.2.
“Many participants thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility,” minutes from the April 28-29 FOMC meeting said.
The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.
At its last meeting, the Fed removed all calendar references in its forward guidance and said that recent economic weakness might be “transitory” in nature. This means that bank is now entirely data dependent and a rate increase could happen at any future meeting.
In today’s data, German PPI month-over-month in April was in-line with forecast production of an increase of 0.1 percent. While in Japan, preliminary GDP quarter-over-quarter in March is forecast to an increase of 0.6 percent, beating estimates of 0.4 percent. March preliminary GDP price index year-over-year was down 3.4 percent, slightly off the estimate of 3.6 percent.
Elsewhere, Greece and its possible exit from the eurozone remain in the news. Athens will miss its next repayment to the IMF of 305 million euros, due on June 5, if it fails to reach a deal with its lenders to unlock some bailout funds by that date, it has warned.
Gold prices reached three-month highs late last week at $1,230 per ounce, but couldn’t maintain above the 200-day moving average as prices declined more than $20 yesterday. The dollar is 0.4 percent stronger at 1.1115 against the euro – the fourth straight day of increases for the greenback.
“After yesterday’s sell off precious has been relatively subdued whereas cracks are really appearing across the base metals sector – oil too is shaky but has found a modicum of temporary support,” Triland Metals said. “It feels like the gravitas of $1,200 will pull prices back again, we spent barely a few days above the 200-day-moving average before giving way.”
In the US equities, the Dow Jones industrial average was down 0.1 percent, while the S&P was up 0.1 percent.
In other precious metals, Comex silver for July delivery was up more than a cent at $17.190 per ounce. Trade has ranged from $16.935 to $17.28. Platinum futures for July delivery on the Nymex rose $8.7 to $1,159.60, while the most-actively traded palladium contract was at $777.05, up $1.9.
“With respect to the outlook for inflation, members expected inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate,” the minutes added.
Light sweet crude (WTI) oil futures on the Nymex climbed $0.92 or 1.6 percent at $58.91 per barrel.
(Editing by Tom Jennemann)
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