18 Feb 2015
Gold expectations around FOMC minutes - FXStreet
FXStreet (Guatemala) - Omkar Godbole, analyst at FXStreet, explained that Gold prices have weakened to trade at USD 1206/Oz levels after having repeatedly failed around USD 1235/Oz levels in last few sessions.
Key Quotes:
"The metal could extend the drop to USD 1182.8 levels due to
Lack of Safe haven demand – Gold prices declined despite the Greek debt issue and unrest in Ukraine. Moreover, the metal could not gain on its safe haven appeal and so did the US Treasuries. Moreover, Greece’s government has confirmed that it would apply for an extension of the loan program tomorrow. If the deal is reached, the markets would be more happy to ditch the yellow metal.
Major central banks out of ammo in the short-run – Most of the major central bankers have cut their interest rates to record lows with the latest being the Swedish Central Bank. The markets have also priced-in the European Central Bank’s QE program. Moreover, the Bank of Japan has indicated that further stimulus in the short run would be counter productive. Thus, other major central bankers too, could have a breather before the next round of competitive devaluations begin. Thus, the yellow metal is unlikely to find support from the currency debasement action of central bankers in the short-run.
These factors, along with hawkish Fed minutes are likely to push Gold prices down to USD 1182.6."
"However, in case the Fed minutes provide a dovish surprise, the gains still could be capped around USD 1220-1225 levels due to lack of safe haven demand and low probability of aggressive stimulus measures by major central bankers in the short-term."
Key Quotes:
"The metal could extend the drop to USD 1182.8 levels due to
Lack of Safe haven demand – Gold prices declined despite the Greek debt issue and unrest in Ukraine. Moreover, the metal could not gain on its safe haven appeal and so did the US Treasuries. Moreover, Greece’s government has confirmed that it would apply for an extension of the loan program tomorrow. If the deal is reached, the markets would be more happy to ditch the yellow metal.
Major central banks out of ammo in the short-run – Most of the major central bankers have cut their interest rates to record lows with the latest being the Swedish Central Bank. The markets have also priced-in the European Central Bank’s QE program. Moreover, the Bank of Japan has indicated that further stimulus in the short run would be counter productive. Thus, other major central bankers too, could have a breather before the next round of competitive devaluations begin. Thus, the yellow metal is unlikely to find support from the currency debasement action of central bankers in the short-run.
These factors, along with hawkish Fed minutes are likely to push Gold prices down to USD 1182.6."
"However, in case the Fed minutes provide a dovish surprise, the gains still could be capped around USD 1220-1225 levels due to lack of safe haven demand and low probability of aggressive stimulus measures by major central bankers in the short-term."