Gold sharply higher after FOMC statement; Analysts suggest pushing back of rate hike until December
According to Kitco News analyst Gary Wagner, in the FOMC press release, the seeds can be found of a further pushing back of a Federal Reserve interest-rate hike until December.
He finds the most important sentence at the bottom of the statement:
“The Committee currently anticipates that, even after employment and
inflation are near mandate-consistent levels, economic conditions may,
for some time, warrant keeping the target federal funds rate below
levels the Committee views as normal in the longer run.”
The gold was given a boost after the statement was released, as it added about $5.50 in late afternoon trading in New York.
On Thursday the yellow metal was sharply higher.
Gold futures on the Comex for August delivery rallied $10.60, or 0.9%, to trade at $1,187.40 a troy ounce during European morning hours after hitting a session high of $1,188.40.
Later in the day, market participants will anticipate the release of key U.S. data for further cues on the strength of the economy and the future path of monetary policy.
The U.S. is expected to issue a string of data, including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.
Greek crisis
Yesterday European stock markets were lower again amid worries about
Greece defaulting on its debt obligations to its creditors.
On Wednesday the European Central Bank gave way to more emergency loan money to Greece. Greece-EU debt
negotiations broke down Sunday.
Greece’s prime minister Alexis Tsipras is now talking a
hard line against the EU and IMF, which makes the situation even worse.
Yesterday Greece’s central bank said there will be an “uncontrollable
crisis” if the debt talks ultimately fail. Greek bond yields have this
week pushed almost 30% for the two-year note.
Market players are now coming to the view that Greece will probably default on its debt payments. If this happens, markets price action will probably not
be too volatile because the event will have already been factored in
to markets’ price structures, says Kitco News.
