Gold price edges up for second day following dovish Fed stance
The price of gold has extended its rally to second straight day so far in today’s session, recovering from a seven-week intraday low hit during yesterday’s trading. The precious metal has pulled away from its lowest level since early January after minutes from the Federal Reserve’s latest monetary policy meeting showed that central bank officials were cautious of raising interest rates too soon.
Gold for immediate delivery had gained 0.26 percent, or $3.20, to $1,215.28 per ounce as of 08:47 GMT, to be trading about 1.3 percent under its 50-day simple moving average of $1,231.72. During the previous session, the precious metal slumped to an intraday low of $1,197.47, falling below $1,200 for the first time since 05 January. The price of bullion then rebounded after yesterday’s release of minutes from the latest meeting of the Federal Open Market Committee (FOMC).
The record of the January 27-28 summit showed that Fed officials, after considering risks to the economic outlook to be “nearly balanced,” pointed out that the strengthening of the dollar, flash points from Greece to Ukraine and slow growth in wages were weakening the case for the first rise in interest rates since 2006. According to FastMarkets analyst William Adams:
“The precious metals have corrected lower from their January rally and they are looking for support – that may have been found for now following the latest airing of FOMC views. It will be interesting to see how gold performs if there is some positive development over Greece as on the one hand that should reduce the need for safe-haven buying, but on the other hand it may weaken the dollar.”
On the COMEX in New York, gold for April delivery had gained $2.4, or about 0.2 percent, to be at $1,214.9 as of 08:13 GMT. Market participants are currently eyeing developments in Brussels, with media reporting today that Greece has formally submitted a request for a six-month extension to its loan agreement. Gary Wagner, editor of The Gold Forecast, wrote in a note from yesterday: “The news that the rest of the EU and Greece are inching closer to a deal has renewed pressure on gold.”