Author: Paul Ploumis21 May 2015 Last updated at 02:50:56 GMT
(Kitco News) - Gold prices were trading with modest gains in afternoon U.S. trading Wednesday, on a corrective bounce from the strong selling pressure seen Tuesday. The latest minutes of the Federal Reserve’s Open Market Committee meeting produced just a little upside movement in the gold market. June Comex gold was last up $4.00 at $1,210.70 an ounce. July Comex silver was last up $0.124 at $17.20 an ounce.
The latest FOMC meeting minutes revealed the majority of committee members do not want to raise interest rates in June. The minutes also suggested the Fed will continue to be “data-dependent” and that the price weakness of the first quarter was transitory. Recent U.S. economic data has been a mixed bag and has provided no solid clues on when the FOMC might make an interest-rate hike.
The feature in the market place so far this week has been the resurgent U.S. dollar index.
The index is a basket of six major world currencies weighted against the greenback. Many raw commodity markets, including the precious metals, have been hit hard this week, mainly due to the appreciation of the dollar.
The stronger dollar this week has changed many analysts’ notions about the FOREX market price trends. As the dollar index hit a nearly four-month low last week many market watchers were saying the buck had peaked out and the Euro currency had bottomed out. However, this week’s price action has just as many market watchers wondering if the recent dollar weakness and Euro strength were just normal technical corrections amid strong longer-term price trends in both currencies—up for the dollar index and down for the Euro. Price action this week in the dollar index and Euro will be extra important. At the end of the trading day on Friday, if the U.S. dollar index is near its weekly high and if the Euro is near its weekly low, such would suggest the existing longer-term price trends in both are alive and well, and will continue.
Reports overnight said there is progress being made in the Greece-EU/IMF debt restructuring talks. The existing bailout deal expires in June. The reports said Greece will run out of cash in June without a new cash infusion from its EU-IMF creditors. Despite the progress reportedly being made, this is a big, messy situation that will continue to cause major problems for the European Union. This is a major underlying bearish factor for the Euro currency.
The Bank of England’s minutes of the latest monetary policy meeting, released Wednesday, showed the BOE reckoned U.K. economic growth will accelerate in the second quarter, following a slow start to the first quarter.
The London P.M. fix is $1,210.50 versus the previous A.M. fixing of $1,206.75.
Courtesy: Kitco News