Gold prices extended gains on Thursday morning, holding around one-month highs, as uncertainty surrounding a potential US September interest rate rise continues to support the precious metal.
The spot gold price was last at $1,137.5/1,138.0 per ounce, up $4.50 on Wednesday’s close. Trade has ranged from $1,132.8 to $1,142.2 so far.
“The next test for gold will be a break higher to test resistance around $1,145-1,150, while support remains around $1,125,” MKS said in a note.
The July 28-29 FOMC meeting minutes released overnight suggested that the Fed may resist raising rates in September.
“The minutes of the US Fed’s July meeting showed a committee relatively content with domestic economic activity and labour market progress, but a bit more cautious regarding the inflation outlook and external risks,” Credit Suisse said.
The dollar weakened following the release of the minutes with the basket index last at 96.30.
The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been at near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.
Over the last few months, various members of the organisation have become increasingly hawkish with Federal Reserve chairwoman Janet Yellen expressing a desire to raise rates sometime this year.
However, inflation continues to fall below the Federal Reserve’s target of two percent. In Wednesday’s US data, CPI in July was up 0.1 percent over the previous month, below the 0.2 percent forecast.
Core CPI – excluding food and energy – was also up 0.1 percent month-over-month in July, again missing the consensus of 0.2 percent.
“We feel gold is finally attracting safe-haven demand as concerns over the fallout from China’s devaluation spreads and the market is waking up to the likelihood that emerging market economies are entering another tough time and that could spread to mature economies,” William Adams, FastMarkets head of research, said.
In data today, the key release will be the weekly US unemployment claims and existing home sales.
In the other precious metals, silver was last at $15.37/15.42, up 10 cents. Platinum at $1,015/1,021 climbed $6 – around its one-month high – and palladium at $613/618 was $5 higher.
(Editing by Martin Hayes)
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