The Daily Market Report: Gold Retreats from Overseas Gains


02-Mar (USAGOLD) — Gold firmed in overseas trading to set a 7-session high at 1223.30, but these gains proved unsustainable as the dollar index eked out a new 11-year high. The dominant meme here is that ultra-low U.S. interest rates are still better than negative rates elsewhere.

The quest for yield also continues to push investors into riskier assets, such as shares. Even retired investors, whose portfolios would typically be weighted more toward fixed income products at this point, are exposing themselves to greater risks because they fear their money won’t last through retirement.

It’s a pretty sorry state of affairs when you think about it: Our very own central bank forcing seniors and pension plan managers out along the risk curve. The Fed is one policy miscue away from a potential catastrophe.

Even if the Fed hikes rates this year, it would be a miniscule 25 bps (or less). It would likely be a considerable period (to borrow some Fed phraseology) before there were another incremental hike. I think it’s just a case of the central bank trying to claw back some ammunition so they have room to cut again when the economy inevitably stalls again, without having to go negative.

Wall Street Journal Fed watcher Jon Hilsenrath warns that the central bank is ushering a new era of uncertainty on rates.

Central-bank policy makers on average see rates going nearly twice as high as futures markets indicate in coming years, for a variety of reasons. — Jon Hilsenrath

On this front, one need look no further than the Fed’s forecasting track record to discern who is more likely right. The last time the Fed hiked the Fed funds rate was June 2006; more than 8½-years ago. An uptick from 0% would not a new trend make.

In fact, the latest round of weak U.S. data, persistent global deflationary pressures and the latest rate cuts from the PBoC leaves my skeptical that the Fed will be able to edge off the zero-bound at all this year. We have become Japan, hurdling toward the conclusion of our first lost decade.

Posted in Daily Market Report, Gold News, Gold Views |

Greece in talks for third bailout of up to €50bn, Spain says

02-Mar (Financial Times) — Negotiations have begun on a third bailout package for Greece worth between €30bn and €50bn, the Spanish economy minister said on Monday.

“We are negotiating a third rescue for Greece,” Luis de Guindos told a conference in Pamplona. The minister added that the Spanish government, which has been locked in an escalating war of words with Athens in recent days, would contribute 13-14 per cent of the new bailout. The new accord would provide for “flexibility” and would include new conditions for Greece.

…It has long been expected that Greece would have to seek yet another bailout to cover its financing needs. But Mr de Guindos is the first European minister to declare publicly that negotiations had begun, and to specify the amount of money at stake.

[source]

PG View: Use bailout 2 to pay down bailout 1. Use bailout 3 to pay down bailouts 1 and 2. Where does it end?

Posted in Debt, European Debt Crisis |

Russian central bank seen holding rates as inflation soars

02-Mar (Reuters) – Russia’s central bank will hold its interest rates steady this month as inflation stays in double digits despite an economic slump, a Reuters poll predicted on Monday.

The economy is set to see its first recession this year since the aftermath of the global financial crisis as sanctions imposed on Moscow for its role in the Ukraine conflict and a sharp drop in oil prices bite.

These pressures have also led to a steep fall in the value of the rouble.

Out of 15 analysts who gave a rate forecast, 11 predicted that the bank would hold its key policy rate at 15 percent in March, with three predicting a cut and one a raise.

[source]

Posted in Central Banks, inflation, Monetary Policy |

US Markit manufacturing PMI revised up to 55.1 in Feb, above expectations of 54.3, vs 54.3 preliminary print.

Posted in Economic Data |

US manufacturing ISM fell to 52.9 in Feb, below expectations of 53.2, vs 53.5 in Jan; prices steady at 35.0.

Posted in Economic Data |

US construction spending -1.1% in Jan, well below expectations of +0.3%, vs positive revised +0.8% in Dec.

Posted in Economic Data |

Apple poised to goose gold as economic numbers start flying

02-Mar (MarketWatch) — . . .Gold prices don’t appear to be too concerned that stocks are moving higher in the early hours. Why would they be? Apple, at least according to our call of the day, could be about to goose prices by buying up unfathomable amounts.

[source]

Posted in Gold News |

US personal income +0.3% in Jan, below expectations of +0.4%, vs +0.3% in Dec. PCE -0.2% on expectations of -0.1%, vs -0.3% in Dec.

Posted in Economic Data |

China’s Central Bank Cuts Interest Rates

28-Feb (Wall Street Journal) — China’s central bank cut interest rates for the second time in less than four months, in a fresh sign that the country’s leadership is becoming more aggressive in trying to arrest flagging economic growth.

The rate cut by the People’s Bank of China, announced Saturday, came sooner than some analysts and investors had expected and reflects growing worries over the world’s second-largest economy as it struggles with an array of ills: a slumping property market, more money being sent offshore and growing risks of falling prices that, in effect, are pushing up borrowing costs for businesses.

Deflationary risk and the property market slowdown are two main reasons for the rate cut this time,” said a central bank official in an interview late Saturday.

[source]

Posted in Central Banks, Currency Wars, Deflation, Monetary Policy |

Gold higher at 1218.40 (+5.55). Silver 16.66 (+0.081). Dollar easier. Euro higher. Stocks called mixed. US 10yr 2.00% (+1 bp).

Posted in Markets |

Could China actually have 30,000 tonnes of gold in reserves?

Lawrence Williams/MineWeb/3-1-2015

“My attention has just been drawn to a note put out by a very well respected analyst and China follower which postulates that China could actually be holding as much as 30,000 tonnes of gold in various government accounts and that within the next three years the nation will link the yuan to gold. The nation’s official holding is only 1,054.6 tonnes as reported to the IMF, but there is widespread belief that it has been accumulating additional gold over the past several years, perhaps to the tune of around 5,000 tonnes while holding this in separate non-reportable (as China considers them) accounts. But, of course, this does not include previously high volumes of gold which may also have been bought, and stored, in the past, and again never reported as official holdings.’

Also see Why China thinks gold is the buy of the century (Review & Outlook, October  2014)

Posted in all posts |

End-of-week top gold news

Friday, 27-Feb-2015

Tyler Durden (ZeroHedge) This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300% “It also shows the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!”

Note: Such an obvious problem, and yet countries keep racking up additional debt at an alarming pace. While debt is cheap now — in some cases even garnering a negative yield — it won’t always be thus, and then there will be a moment of reckoning like nothing we’ve ever seen before.

Jan Strupczewski and Matthias Sobolewski (Reuters) Euro zone backs Greek reform plan, 4-month aid extension “Greece secured a four-month extension of its financial rescue on Tuesday when its euro zone partners approved a reform plan, as Athens backed away from some proposed measures and promised that spending to alleviate social distress would not derail its budget.”

Note: And speaking of debt. . .Greece secured a 4-month kick of their debt can, but I can’t think of anyone who doesn’t believe that Greece will be right back in crisis mode come June.

Marcy Nicholson and Jan Harvey (Reuters) Gold climbs as Fed signals no rush to raise rates “Gold rose on Wednesday, recovering from the previous day’s seven-week lows, after comments from Federal Reserve Chair Janet Yellen suggested the central bank was in no rush to raise interest rates.”

Note: Data that came out later in the week revealed an economy that is right back limping along at the same tepid pace that has been seen throughout much of the so-called “recovery”.

Peter Spence (Telegraph) US falls back into deflation for first time since crisis “The US economy has fallen back into deflation for the first time since 2009, amid an ongoing slump in oil prices.”

Note: Heightened deflationary pressures, in the U.S. and elsewhere in the world, is also likely to give the Fed pause when it comes to rate hikes.

Cecilia Jamasmie (MINING.com) Apple buying a third of world’s gold to meet demand for iWatch “Josh Centers, from TidBits, estimates that each gold watch will contain 2 troy ounces (62.2 grams) of gold. So, based on the estimated sales figure, he concludes that Apple will need 746 tons of gold a year, or about 30% of the world’s annual production.”

Note: So suddenly 30% of the world’s annual gold supply will go toward making a shiny discretionary consumer item. Sort of puts the whole supply side of the equation in perspective.

(Financial Times) Gold extends gains as investor anxiety mounts “Analysts are attributing the bounce to a combination of growing investor anxiety and the return of Chinese buyers following the end of the Lunar Year holiday in Asia. On the first point, while an extension to the Greek bailout has been agreed in principle, analysts at Deutsche Bank said concern is now over how this will unfold and what might happen afterwards.”

Note: What happen afterwards is that Greece still won’t be able to pay its debts; so the whole silly process will start all over again.

Michael Kosares (USAGOLD) British Sovereigns in Greece no doubt expensive at this juncture, but in high demand nonetheless “The best time to buy gold is not when you find yourself at the crisis’ epicenter, but well before – when prices are in a normal range and availability is not an issue.”

Note: Truer words were never spoken. Our Sovereigns remain comparably priced to similarly sized contemporary bullion coins.

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Poised for Higher Weekly Close


27-Feb (USAGOLD) — Gold is trading within Thursday’s range, but appears poised to break of the string of four consecutive lower weekly closes. In fact, a higher weekly close will confirm a simple hook reversal.

Continued dovishness from Fed chair Yellen this week, along with the return of Asian physical buyers after the long Lunar New Year holiday has been mildly supportive to gold. Today’s negative Q4 GDP revision and another disappointing regional PMI miss lends further credence to the expectation that the Fed will not raise rates by June.

Q4 GDP was revised down to a 2.2% annualized pace, from a 2.6% preliminary print. However, the pace of growth has more than halved since the final Q3 number of 5.0%. Chicago PMI for February tumbled to 45.8, well below expectations of 58.2, versus 59.4 in January.

Basically growth has collapsed back to the rather tepid pace that has dominated since the “recovery” began six-years ago. And we’ve expended a lot of time, energy and money to maintain ‘lackluster’. On top of that, there continue to be massive market distortions that put what little we have gained in great peril.

The people of Greece know exactly what I’m talking about. They have received billions in bailouts that have done little to improve their situation. Arguably it has made it worse.

Now, it looks like they have secured a four-month extension, but they are not going to have any better chance in June of resolving their crisis than they do today. In fact, the trache of funds they will receive as part of their extension will go toward servicing the debt they’ve already incurred.

The people of Greece know this is just a very short-term kick-of-the-can and many of them are buying gold as a means to preserve the wealth they still have. “[P]eople up and down the income ladder are emptying bank accounts in anticipation of more financial system chaos in the future – including fear of abandoning the euro and re-introduction of the drachma,” wrote our own Michael Kosares in a post this morning.

Mike goes on to remind us:

“The best time to buy gold is not when you find yourself at the crisis’ epicenter, but well before – when prices are in a normal range and availability is not an issue.”
Posted in Daily Market Report, Gold News, Gold Views |

We’ve Just Received a Bunch of Disappointing News on U.S. Manufacturing

27-Feb (Bloomberg) — Here’s some data you should be watching.

Various regional surveys of manufacturers that have been released over the past couple of weeks have all missed expectations.

Feb. 17: Empire State Manufacturing Survey: 7.78, down from 9.95 previously. Slight miss on expectations of 8.0.
Feb. 19: Philadelphia Fed Business Outlook: 5.2, down from previous 6.3. Far below expectations of 9.0.
Feb. 23: Dallas Fed Manufacturing Activity: -11.2, down from previous -4.4. Far below expectations of -4.0.
Feb. 24: Richmond Fed Manufacturing Index: 0.0, down from previous 6.0. Far below expectations of 6.0.
Feb. 26: Kansas City Fed Manufacturing Activity: 1, down from previous 3. Below expectations of 3.
Feb. 27: Institute for Supply Management–Milwaukee: 50.32, down from previous 51.60. Below expectations of 54.0.
Feb. 27: Chicago Purchasing Managers: 45.8, down from previous 59.4. Far below expectations of 58.0.

While two weeks don’t make a GDP quarter, it is notable that all these survey data points missed both their previous levels and their expectations.

[source]

PG View: Given that Q4 suffered a negative revisions today as well, things don’t seem as rosy as I keep hearing. . .

Posted in Economic Data, Economy |

China plans yuan-denominated gold fix in 2015

27-Feb (South China Morning Post) — China plans to launch a yuan-denominated gold fix this year to be set through trading on an exchange, sources familiar with the matter said, as the world’s second-biggest bullion consumer seeks to gain more say over the pricing of the precious metal.

The Chinese benchmark would be derived from a new 1kg contract to be launched on the state-run Shanghai Gold Exchange, a senior source directly involved in the process told Reuters.

China, also the top producer of gold, feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.

[source]

Posted in all posts, Gold News, Gold Views |

British Sovereigns in Greece no doubt expensive at this juncture, but in high demand nonetheless

2010_05threepigs-1

We continue to read reports of strong demand for British sovereigns in Greece where people up and down the income ladder are emptying bank accounts in anticipation of more financial system chaos in the future – including fear of abandoning the euro and re-introduction of the drachma.  There is a school of thought that Syriza is attempting to buy time in order to prepare for euro exit though there is no way of knowing what the new Greek government is planning.

It brings to mind though something that appears rather obvious, but does not hit home unless one takes the time to be exceptionally frank and realistic with oneself.  The best time to buy gold is not when you find yourself at the crisis’ epicenter, but well before – when prices are in a normal range and availability is not an issue.  There is little doubt  that Greeks who want to buy gold today are paying significant premiums if they can buy at all.  Anxiety among the well-to-do is no doubt running at all time highs – even for Greece.  It is amazing to me that there has not already been capital controls including, but perhaps not limited to, restrictions on gold ownership, but then again, maybe it is in everyone’s interest to leave the tap open for now.  When the clamp-down comes, it may make Cyprus look like a side show.

Some thoughts on a snowy Friday morning in Denver. . . .MK

Posted in all posts |

HK January gold exports to China confirm strong demand

by Lawrence Williams
27-Feb (MineWeb) — The latest figures for net gold exports from Hong Kong into China confirm the latter nation’s strong demand in the run up to the Chinese New Year holiday. The figure for January was 76 tonnes, up from 71 tonnes in December, but it should be realised that this Hong Kong figure relates specifically to Chinese gold imports – not total demand – and then only to a diminishing proportion of the Asian dragon’s total gold imports.

[source]

Posted in Gold News, Gold Views |

Chicago PMI tumbled to 45.8 in Feb, well below expectations of 58.2, vs 59.4 in Jan.

Posted in Economic Data |

Germany is LITERALLY getting paid to borrow money

27-Feb (WashingtonPost) — Germany’s balanced budget couldn’t be more fiscally irresponsible.

It’s not just that Germany has gotten into the black by scrimping on repairs today that might end up costing it more tomorrow. It’s that Germany’s being so tight-fisted at the least opportune moment possible. It’s never going to have lower borrowing costs, so it might as well spend the money now that it’s eventually going to have to on upkeep and upgrading its infrastructure. In fact, it’s even worse than that. Germany is actually losing money by not borrowing money. That’s because it’s getting paid to borrow right now: for the first time, it just sold a 5-year bond at a negative interest rate.

[source]

PG View: Germany recently sold 5-year bunds at a -0.085 interest rate. German debt is certainly considered to be a low risk investment, because of the government’s fiscal prudence. However, the notion that there is less than no risk is nonsense. That is the direct result of activist central banks distorting the pricing of risk. This is not a healthy market.

Posted in Central Banks, Debt, Monetary Policy |

Greece Warns It May Default On IMF Loan As Soon As Next Week

26-Feb (ZeroHedge) — Now that the Greek tragicomedy of the new government “threatening” to leave the Eurozone if it doesn’t get its way, has been postponed for a few weeks, if not months, we can go back to the biggest story involving Greece, one we first covered in October of 2014, when we said that Greece needs about €43 billion through the end of 2015 to cover its funding needs. Earlier today, the broader market finally woke up to precisely this problem for Greece, when MarketNews reported that Greek creditors are now contemplating a third bailout which could be as large as €30 billion.

Of course, the only “use of proceeds” of this bailout would be to cover prior financing obligations: maturities and interest on pre-existing debt. None would actually go to the Greeks themselves; however a third bailout would certainly come with even more draconian conditions and terms that would make the current Greek “austerity” measures seem like a walk in the park.

So now that the Greek topic is back to overall debt sustainability, a few hours ago Greece Kathimerini reported that the Euro Working Group “discussed Greece’s imminent funding problems on Thursday amid mounting concern about how the country will meet its obligations next months.”

This follows a suggestion earlier in the day by the Greek Minister of State for Coordinating Government Operations Alekos Flambouraris that “Greece might delay payment to the International Monetary Fund if it cannot find the necessary money.”

According to Kathimerini calculations, Greece is due to pay the IMF 1.6 billion euros next month but Flambouraris said that Athens might ask to delay this payment for two months.

[source]

PG View: The 4-month kick-of-the-can may not even buy 4-months. It certainly solves nothing.

Posted in Debt, European Debt Crisis |

US Q4 GDP (2nd report) revised down to +2.2%, above expectations of +2.0%, vs +2.6% preliminary print.

Posted in Economic Data |

Greece’s Challenge: Appeasing Its Creditors and Its Population

27-Feb (Wall Street Journal) — Greece and the rest of the eurozone spent February fighting about the procedure for keeping the country afloat. They will spend the spring haggling over a tougher issue: Which economic policies can appease both Greece’s creditors and its population?
Analysis

This week’s agreement to carry on talking was hard enough to achieve. The next deal will be far harder because the airy communiqués that preserved a consensus so far must be turned into meaty policy decisions.

Part of the mistrust between Greece and its German-led creditors stems from an ideological rift over what has gone wrong in the small, distressed country over the past five years.

Berlin blames the economic collapse that followed Greece’s 2010 bailout on the fiscal and other sins that predated it. Greece’s new government blames the bailout for turning a financial crisis into a full-blown depression. Opposite policy prescriptions follow from these clashing interpretations.

Finding common ground will be the key to keeping Greece in the euro. The search must survive three stages, if Greece’s new drama isn’t to end in the drachma.

[source]

Posted in Debt, European Debt Crisis |

Gold steady at 1209.75 (+0.35). Silver 16.50 (-0.085). Dollar lower. Euro higher. Stocks called lower. US 10yr 2.03% (unch).

Posted in Markets |

Greenspan. . . “tantamount to the later stages of the Great Depression.”

CNBC interview/Michelle Fox/2-26-2015

“The fact that the market is anticipating that the Federal Reserve will raise interest rates, yet the yields on the 10- and 30-year Treasurys are falling is an indication of how weak the overall global economy is, former Fed Chairman Alan Greenspan told CNBC on Thursday. In fact, effective demand is extraordinarily weak, he said. ”The way I measure it, it’s probably tantamount to what we saw in the later stages of the Great Depression,” Greenspan said in an interview with Closing Bell.”

USAGOLD comment:  You get the impression that Greenspan believes that the Fed is not in a position to raise interest rates – or maybe better put, the economy would be unable to withstand a rise in interest rates on many different levels. So tread softly, he says, and bury the stick.  What does this mean for gold?  The maestro already told us how he feels about  owning gold late last year.  “Gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.”  And there is a lot more he says about gold at that link.  If you aren’t up to speed, a visit there is very worthwhile.

Posted in all posts |

Gold extends gains as investor anxiety mounts

26-Feb (Financial Times) — Gold is shining for a second straight day.

The yellow metal advanced 0.5 per cent to hit a one week high of $1,210.60 a troy ounce, following a 0.4 per cent gain on Wednesday.

Analysts are attributing the bounce to a combination of growing investor anxiety and the return of Chinese buyers following the end of the Lunar Year holiday in Asia.

[source]

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Firms, Despite Dollar Gains


26-Feb (USAGOLD) — Gold rebounded to a new high for the week in overseas trading, buoyed by expectations that the Fed won’t be raising rates any time soon, and interest from Asian buyers who are returning from the long Lunar New Year holiday. While the yellow metal softened after a round of mixed U.S. economic data, the short-term bias remains to the upside.

Fed chair Yellen reassured investors in testimony before Congress earlier in the week that the central bank would remain patient with regard to any potential tightening of monetary policy. Nonetheless, the dollar remains firm, with the dollar index setting new 4-week highs today. While this may be limiting the upside for gold somewhat, dollar strength has not really been pushing gold lower lately.

Part of this has to do with foreign demand for U.S. Treasuries, where you can still get a positive yield, albeit a small one. Let’s use the recent U.S. 5-year note auction to illustrate the point: The U.S. 5-year yield is presently 1.51%. By comparison, the Japanese 5-year JGB yield is 0.09% and the German 5-year Bund yield is -0.1%.

Indirect bidders (a proxy for investments made by foreign investors) took up 60.1% of yesterday’s $35 bln 5-year auction. That’s the 4th highest indirect bid on record. It is reflective of the reality, that while 1.51% on 5-year money is pretty lame, it’s a far-sight better than 0.09% or -0.1%. These foreign investors need dollars to buy these relatively high yielding U.S. securities.

The Fed hasn’t raised rates in nearly a decade, but the mere hint that they might at some point this year has caused the dollar to rally more than 20% since May of last year. Certainly, the fact that other major central banks continue to cut rates and launch additional extraordinary accommodations have played a significant role in the dollar’s rise as well.

Earlier this week, Jim Grant of Grant’s Interest Rate Observer warned that the “virus of radical monetary policy is now coursing through the political bloodstream. There’s no going back, at least not for the medium term.”

U.S. CPI fell 0.7% in January, pushing the annualized rate into negative territory for the first time since 2009.

That’s pretty remarkable when you think about it. Nearly 10-years of falling and near-zero interest rates, not to mention trillions of dollars worth of bailouts, QE and other extraordinary measures and deflation is the biggest threat right now. One might view this as a rather ominous harbinger.

The BLS blames the deflation on plummeting gas prices, and the Fed maintains the effects will be “transitory.” However, if negative price risks persist, the Fed is going to find it very difficult to justify hiking rates.

The policy trend elsewhere in the world, which is being driven largely by concerns over deflationary pressures, is going to be a hard one to buck. I continue to think that the most hawkish stance we can expect from the Fed this year is that they hold steady.

Posted in Daily Market Report, Gold News, Gold Views |

Saudi gold investments hit SR14b, up 20% in 2015

26-Feb (CustomsToday) — Saudi gold investment exceeds 20 percent to SR14 billion in 2015. World Gold Council (WGC) has released data, in which demand on gold in the local markets is exceeding 55 tons, a good proof that purchasing power on gold is not affected by marginal factors that are facing local markets such as low purchase levels by Haj and Umrah performers.

The projected investments will expand gold factories to roughly 300 which will feed the local markets with world-class gold products and jewelry, the dealers told Alsharq Al-Awsat daily.

[source]

Posted in Gold News |

Apple buying a third of world’s gold to meet demand for iWatch

26-Feb (MINING.com) — Technology giant Apple(NASDAQ:AAPL) may soon buy up one third of the world’s gold in order to meet the demands of its highly anticipated Apple Watch, according to reports.

Interest in the high-end model, featuring 18-karat gold casing, is picking up and the firm is already taking the necessary steps to have enough of the in stock. According to WSJ.com, Apple plans to start producing more than one million units per month in the second quarter of the year, anticipating high demand from Asian markets, mainly China.

Josh Centers, from TidBits, estimates that each gold watch will contain 2 troy ounces (62.2 grams) of gold. So, based on the estimated sales figure, he concludes that Apple will need 746 tons of gold a year, or about 30% of the world’s annual production.

[source]

Posted in Gold News, Gold Views |

German lawmakers to back Greek extension despite misgivings

26-Feb (Reuters) – German lawmakers signaled that they will approve an extension of Greece’s bailout with an overwhelming majority in parliament on Friday although many will do so reluctantly amid fears Athens will not deliver on its reform promises.

Angela Merkel’s coalition has a big enough majority to easily win the vote in the Bundestag lower house to extend the rescue by four months. But many lawmakers, including Finance Minister Wolfgang Schaeuble, have expressed concern in recent days about whether Athens is to be trusted.

[source]

PG View: I’m going to go out on a limb here and predict that Europe will be right back in crisis mode in June, after Greece fails to advance the reforms they’ve promised (again).

Posted in Debt, European Debt Crisis |

Gold up 1 pct on U.S. rate hike view, Chinese buying

26-Feb (Reuters) – Gold rose 1 percent on Thursday after comments from the Federal Reserve pushed back expectations for a first U.S. rate hike in nearly a decade and Chinese buyers snapped up metal on their return from the Lunar New Year break.

Spot gold was up 1.2 percent at $1,218.35 an ounce at 1224 GMT, after hitting a session high of $1,220.00.

Fed chair Janet Yellen indicated in testimony to the Senate Banking Committee on Tuesday and the House of Representatives’ Financial Services Committee on Wednesday that the U.S. central bank was in no rush to raise interest rates.

Since then, some analysts have shifted expectations for the first U.S. rate hike since 2006 to happen in September or later this year, instead of June as previously expected.

“The combination of China returning, Yellen pushing the can further out, bond yields lower and exchange-traded product demand picking up has helped create a floor following a $117 sell-off (in gold) since January,” Saxo Bank’s head of commodity strategy Ole Hansen said.

[source]

PG View: Today’s U.S. CPI print, confirming that prices dropped on an annualized basis in January, provides further incentive for the Fed to delay any rate hike.

Posted in Gold News, Gold Views |