The Daily Market Report: Gold Dips Back Below as FOMC Maintains Some Hawkishness

09-Apr (USAGOLD) — Gold dipped back below the $1200 level, weighed by persistent expectations that the Fed will still raise rates at some point this year, albeit later than previously expected. This has pushed the dollar index to new 3-week highs, pushing the yellow metal lower.

Minutes from the March FOMC meeting released yesterday revealed quite a bit a disagreement as to when rate ‘lift-off’ should occur. Several members continued to think June was an appropriate time for that first hike. However, that was before the weak March jobs data came out.

Many analyst now seem to be leaning toward a December hike. Others are now thinking sometime in 2016 is more realistic.

Here’s the thing though, the Fed has been very clear that tightening is data dependent and the string of weak data has continued in the weeks following the FOMC meeting. Today’s wholesale sales data was the latest bit of bad news that has already prompted additional downward revisions to Q1 GDP expectations.

Wholesale sales for February fell 0.2%, on expectations of a 0.3% rebound. January’s terrible -3.1% print was revised lower to -3.6%. You’d have to go all the way back to July of last year to find a positive print. Inventories rose another 0.3% and the inventory-to-sales ratio is now looking very recessionary.

I continue to believe that the odds of a rate hike this year are about zero, but if the U.S. slips back into recession, even a rate hike next year becomes unlikely. Additionally, talk of QE4 would probably intensify significantly.

That would put renewed pressure on the dollar, which would in turn underpin gold. This may be the last opportunity to pick up some gold — the safest of the safe-havens — at these low prices.