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SP Angel: Gold Rises On Expectations Of Dovish Fed

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Gold has ticked higher ahead of a two-day meeting of the Federal Open Market Committee that ends Wednesday, analysts report. As of 8:11 a.m. EDT, spot metal was $5 higher to $1,308.30 an ounce. “Gold climbed for a third day amid expectations of dovish signals as Fed officials are likely to indicate patience on monetary policy amidst growing economic weakness as it meets this week,” SP Angel says. “A decision is due Wednesday, with expectations to hold interest rates steady and lower projections for the number of interest-rate hikes.” Lower U.S. rates tend to help gold by hurting the U.S. dollar and also means a lower so-called opportunity costs, or lost interest income, from holding a non-yielding asset like precious metals.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Bannockburn: Fed ‘Out Of The Picture For The Coming Months’

Tuesday March 19, 2019 08:23

Market participants are not expecting the Federal Open Market Committee to hike interest rates this week, and Treasury yields and the futures market for the Federal funds rate suggest a decline down the road, says Marc Chandler, chief market strategist with Bannockburn Global Forex, LLC. “The FOMC meeting concludes tomorrow and between the softer inflation readings, disappointing job growth and the soggy manufacturing output reinforces ideas that the central bank is out of the picture for the coming months,” he says. Chandler points out that some economists share the view of former New York Fed President William Dudley that the economy is likely to regain momentum, with increasing price pressures, which may mean potential rate hikes in the second half. “The market disagrees,” Chandler says. “The January 2020 fed funds futures contract implies an average effective yield of 2.31%.  The current average effective rate is 2.40%.” Meanwhile, the U.S. 10-year yield is slightly below 2.60%, the lower end of where it has traded over the past 15 months, Chandler says. Some observers conclude this is warning of an economic downturn, although this would be a contradiction to the rally in the S&P 500 since October, Chandler adds.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Commerzbank: Feb. Swiss Gold Exports To China, India Weak

Tuesday March 19, 2019 08:23

The most recent trade data show weak exports of gold last month to the key buying nations of China and India, although India’s demand is likely to pick up due to lower prices in the local currency says Commerzbank. Analysts cite data from the Swiss Federal Customs Administration showing that Switzerland exported only 11.4 tonnes of gold to China and Hong Kong in February. Exports to India totaled 15.8 tonnes, a year-on-year decline of 43%. “By contrast, figures published nearly two weeks ago by the Indian Ministry of Finance had pointed to a revival of Indian gold demand,” Commerzbank says. “They indicated that the wedding season saw India import more gold in February than a year earlier (70.7 tonnes). Indian gold imports are likely to gain further momentum in the next few months as gold prices in Indian rupees have fallen sharply since mid-February, and the upcoming elections should generate increased gold demand among the rural population.”

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