Gold Price holds above $1,200 as case for U.S. rate hike delay builds
Singapore (Apr 8) Gold hovered above $1,200 an ounce on Wednesday, trading not far below a seven-week high as expectations grow that the Federal Reserve could delay an anticipated U.S. rate hike this year.
The Fed will release the minutes of its March meeting later in the day and analysts say this would likely affirm policymakers' cautious outlook on the U.S. economy.
At that meeting, Fed officials opened the door for a rate increase as early as June by removing a pledge to be "patient" in normalizing monetary policy. But its cautious economic outlook reflected the Fed's overall dovish bias, sending gold on a seven-day rally in its longest winning run since 2012.
Last week's dismal U.S. nonfarm payrolls suggested the Fed would be in no rush to tighten policy, lifting gold to a seven-week high as investors moved to assets seen as less risky.
"I expect the minutes to confirm that the Fed will remain dovish in the near future, with a cautious outlook along the lines of the U.S. economy is not ready for a rate hike soon," said Howie Lee, investment analyst at Phillip Futures, who sees gold testing $1,250 in the current quarter.
Spot gold was steady at $1,208.95 an ounce by 0643 GMT. Bullion climbed to $1,224.10 on Monday, its highest since Feb. 17.
U.S. gold for June delivery was also little changed at $1,209.70 an ounce.
Minneapolis Fed President Narayana Kocherlakota on Tuesday laid out a case for waiting until the second half of 2016 to start raising rates, a day after New York Fed President William Dudley said the timing of an increase was unclear.
Physical demand from No. 2 gold consumer China stayed weak as the premium for physical gold at the Shanghai Gold Exchange held just above par with the global spot benchmark on Wednesday.
"There are more investment venues for the Chinese to look into other than gold. Equities are roaring ahead and they can now buy bond futures. I don't see why people should buy gold at this time," said Lee.
Gold needs to close above the 200-day moving average of around $1,232 "to instil confidence that this latest short-term rally has further impetus", said MKS Group trader James Gardiner, adding that the continued strength in the dollar is hampering bullion's gains. Precious metals prices at 0643 GMT Metal Last Change Pct chg YTD pct chg Spot Gold 1208.95 0.75 +0.06 2.15 Spot Silver 16.84 0.03 +0.18 7.54 Spot Platinum 1171.00 0.02 +0.00 -2.41 Spot Palladium 768.60 1.62 +0.21 -3.04 COMEX GOLD JUN5 1209.70 -0.90 -0.07 2.16 COMEX SILVER MAY5 16.85 0.00 +0.03 7.99 Euro/Dollar 1.0838 Dollar/Yen 119.88 COMEX gold and silver contracts show the most active months