Gold struggles despite Fed dovishness
New York (Feb 19) Gains for gold after last night’s release of the minutes from the Federal Reserve’s last monthly meeting proved short-lived.
A request to extend Greece’s bail-out for another six months was scuppered by Germany, which said the request was not a proposal to solve the country’s debt problem.
Economists were surprised by hardball stance from the Germans, which sent the euro sliding against the dollar, with the seeming eagerness of the new Greek government to strike a compromise also a drag on the metal.
Spot gold was trading up US$1 at US$1,214 shortly before Wall Street opened, well off its high seen shortly after the Fed minutes emerged last night.
It was more dovish than feared, said traders, with FOMC members still prepared to maintain the current zero rate of interest rates for a prolonged period.
Ahead of the publication, Merrill Lynch had suggested a new bull market for gold may be just around the corner.
The US broker had previously voiced a view that interest rates may rise after than expected and repeated that the risk that of low inflation and slowing job/activity growth could mean a rate rise does not occur until September instead of most forecasts of June.
“In turn, this would be a trigger for a meaningful gold-price appreciation, a point we have made in several recent notes,” said the broker.
Silver was flat at US$16.55, while platinum eased US$6 to US$1,165.