By Mr. Prithviraj Kothari, MD, RSBL
This week gold continued to hover
around the levels of $1176.75 and broadly the key trade range for the yellow
metal was $1170- $1175 an ounce.
Gold reached a four-month high of
$1,192 on Thursday but was unable to maintain this level, because the US dollar
was driven up by higher than expected US inflation figures for September, which
in turn put pressure on gold.
Fed has set inflation target for
years as it’s a part of the dual-mandate along with full
employment. But Inflation has failed to meet the Fed’s target.
Persistently low inflation has led
some Fed members to remain dovish on the apt timing for a stabilization of US
monetary policy.
At the beginning of the week,
Chicago Federal Reserve president Charles Evans said earlier today that he
would prefer to wait until 2016 to raise interest rates, citing inflation as a
central impediment.
Moreover, Data released on Thursday showed that the US labor market is
steadily recovering despite the worrisome September job’s report – weekly
unemployment claims came in at 255,000, below the consensus of 269,000.
Apart from this some other important
data released through the week were-
- US CPI month-over-month in September met expectations of a 0.2 percent decline
- PPI month-over-month in September dipped 0.5 percent, disappointing market expectations of a 0.2 percent drawdown
- Empire State manufacturing index for October at -11.4 was worse than the expected -7.3
- The Philly Fed manufacturing index at -4.5 missed the -1.8 forecast
- Core retail sales month-over-month in September fell 0.3 percent, below the forecast of -0.1 percent. Retail sales over the same period rose 0.1 percent, just missing the 0.2 percent consensus
- Labor's Bureau of Labor Statistics (BLS) said its Consumer Price Index fell by 0.2% for the month of September, in line with consensus estimates. A month earlier, the reading fell by 0.1% in August. On a year over year basis, the headline reading is identical to its level 12 months ago
- Core PPI month-over-month last month stood at -0.3 percent, another figure to miss estimates, which were a 0.1 percent uptick
Though the Core CPI was moving in a
positive direction from its previous levels of August still it remained under
the Fed's preferred gauge of under 1.5%.
The set target for long term inflation
by the Fed is likely 2% before it raises its benchmark Federal Funds Rate.
Gold prices eased in Asia on Friday
on profit taking on recent gains on a soft. Outlook for U.S. interest rates. On
Thursday morning, the U.S. Department of There were signals throughout the
report of weakness in the energy sector, restraining inflationary pressures
overall.
The spot gold price was last at
$1,176/1,176.20 per ounce, down $5.90 on Thursday’s close.
Jobs data has acquired greater
significance after the US Federal Reserve made its approach to the normalization
of monetary policy entirely data-dependent.
Gold drifted lower still on Friday
morning in Europe after dollar continued to pare earlier losses thanks to
better-than-expected US jobs data.
As dissent grows in the Federal
Reserve over the appropriate measures for 2015, the dollar has deteriorated to
the weakest mark since August 25.
Various Fed members are growing more
vocal in their view that the US economy is not ready for a federal funds hike –
in direct opposition of Chairwoman Janet Yellen.
Yellen, along with vice chair
Stanley Fischer, have said recently that a normalization of US monetary is
still a viable option for 2015.
However as per market analysts, the
FOMC is not seen lifting rates until March at the earliest.
While the market is once again
divided into bearish and bullish supporters, the yellow-metal has found support
as the market’s pricing of the next US Federal Reserve rate hike is pushed out.
The primary purpose of this article by
Mr. Prithviraj Kothari is to educate the masses of the current happenings in
the Bullion world.
- Previous blog-
"Ambiguity For Gold: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2015/10/ambiguity-for-gold.html
http://riddisiddhibullionsltd.blogspot.in/2015/10/ambiguity-for-gold.html