Gold Price Movements
Gold prices jumped +1.4% yesterday to $1,202, a level that we said the
precious metal may test on the wake of a seemingly increasing dovish US
. Gold also seems to be stirred by the unrest in Greece,
as its excessive gains of +1.4% outweighs the movements in the dollar,
which slid only about -0.2% vs the euro.
A weakening of the dollar yesterday, which saw much unwinding of long
dollar positions after a very dovish display by the Federal Open Market
Committee, appeared to be the main catalyst for gold’s rally. To be fair,
this year’s FOMC has always been tipped to be one of the more dovish
in recent times, but its downward projection of interest rate forecasts may
have caught even the most optimistic by surprise. Certainly, the biggest
takeaway was that no FOMC official now feels that rates should end 2015
above 1% - a stark contrast to March, when four officials felt that rates
should end 2015 above said level.
The other main takeaway we had from the FOMC press conference
yesterday was Chairlady Janet Yellen’s comments that the series of rate
hikes that would not follow the trend from the Greenspan era.
Certainly, she and vice-Chair Stanley Fischer had mentioned that
evolvement before, but it’s worth pointing out again that once the first rate
hike officially kicks in, there is no one single guarantee that rates will be
raised in every subsequent FOMC meeting. That policy looks to hold for
as long as Yellen is in charge of the board of governors and that the rotating
members are not suddenly taken over by extremely hawkish personnel.
Remember that gold has been on a long-term decline since 2013 and its
movements this year appears to be a consolidation of sorts. There is little
doubt that with Chairlady Yellen in charge, the monetary environment in the
US will remain accommodative until she steps down. That means the
interest rate market won’t be able to sufficiently flex its muscles to
squeeze the remaining breath out of gold… yet. Depending on the pace
and magnitude of the rate hikes that follow, gold – under the charge of
Janet Yellen – may find support between $1,000 to $1,100, although the
current level of $1,200 is proving extremely sticky in its support.
|Real time Gold Prices (Showing in China Beijing Timing)|
For the rest of the day, the lack of economic news means focus will be
unfairly concentrated on Greek developments
. The nature of matters over in
Europe generally points to more pessimism than optimism. Gold was stirred
yesterday and with talks that an emergency crisis meeting among Eurozone
leaders has been arranged. The safe-haven property of gold may shine
through today and that could bolster some demand for the precious metal.
While I am not expecting yet another +1% rally for gold today, I would
think the prospect of Greece toying with its and the Eurozone’s future
could keep gold supported around $1,200. (Read Report)
Source : Phillip Futures Pte Ltd