Gold prices settled at the highest level in almost a month as expectations of future dovish Federal Reserve policy coaxed out the bulls.
Gold for August delivery on Comex division of the New York Mercantile Exchange rose $25.10 to close at $1,202.00 per ounce, the highest settlement price since May 22. Trade ranged from $1,183.10 to $1,205.70.
After the conclusion of the Federal Open Market Committee (FOMC) meeting, Fed chairwoman Janet Yellen provided a roadmap for the normalisation of interest rates, yet she cautioned observers that the committee would take a “gradual” approach whenever they decided to hike rates.
“As anticipated, the US Federal Reserve did not raise interest rates yesterday,” Commerzbank said. “Nonetheless, in the subsequent press conference Fed Chair Yellen put a dampener on rate hike speculations, which put the US dollar under pressure. She explained that there is no fixed schedule for rate hikes and that the market should not expect the Fed to raise interest rates in every meeting or every second meeting.”
The members of the Fed’s policy board are locked in a debate on when will be the right time to raise rates, which have been near zero since December 2008. Since its decision is now entirely dependent on US data, a rate increase could happen at any future meeting.
US data today could push back expectations for higher rates – CPI in May was up 0.4 percent, below the forecast 0.5 percent and core CPI at 0.1 percent missing the expected 0.2 percent.
But weekly unemployment claims at 267,000 were better than the predicted 278,000, while the current account in March of -$113 billion bettered consensus of -$116 billion.
The Philly Fed manufacturing index in June was 15.2, nearly double the forecast of 8.1.
While in equities, the Dow Jones industrial average and S&P were up 1.1 percent and one percent respectively, with the euro 0.3 percent stronger at $1.1370 against the dollar.
Elsewhere, uncertainty around Greece’s potential sovereign debt default continues to weigh on financial markets. The stand-off between Greece and its creditors continued today at a eurogroup meeting in Luxembourg, but no resolution was reached. The country has less than two weeks left to reach a deal or faces defaulting on a $1.6-billion loan repayment due to the IMF.
As for the other precious metals, Comex silver for July delivery was up 20 cents at $16.150 per ounce. Trade has ranged from $16.020 to $16.430.
Platinum futures for July delivery on the Nymex were up $10.30 at $1,083.00 per ounce, while the most actively traded palladium contract was at $719.10 per ounce, down $1.25.
(Editing by Tom Jennemann)
The post Gold settles above $1,200/oz following dovish Yellen speech appeared first on The Bullion Desk.
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