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Precious Metals Market Report: Gold trims losses after Fed minutes – November 19, 2014

Precious Metals Market Report by Bill Musgrave – American Gold Exchange


Gold trimmed its losses to 0.2% in volatile trade, closing just under $1,194 after the minutes from the Fed’s recent meeting showed concern about inflation expectations.

Gold initially dropped as low as $1,174 early in the session on reports that support is waning for the Swiss gold referendum, scheduled for November 30. If the measure passes, Switzerland will be required by law to keep 20% of official reserves in gold and its national bank would be forced to purchase 1,500 tons of gold over the next five years.

The metal rebounded strongly, however, when the new FOMC minutes warned about managing expectations about possible disinflation, saying “the committee should remain attentive to evidence of a possible downward shift in longer-term inflation expectations.” If consumers begin to expect price deflation, in other words, they might put off spending and undermine the recovery, an occurrence that “would be even more worrisome if growth faltered.”

Traders speculated that concern about possible disinflation may cause to Fed to delay raising interest rates. The dollar spike sharply lower immediately following the release, then rebounded as the Bank of Japan maintained record stimulus after Prime Minister Shinzo Abe called an early election to shore up support for his easing program.

The other precious metals were mixed, with silver climbing 0.7% while platinum and palladium retreated by 0.4% and 0.8%, respectively.

At the Comex close: December gold slipped $3.20 to 1,193.90; December silver climbed 12 cents to $16.29; January platinum dropped $5.70 to $1,198.90; and December palladium fell $6.35 to $770.35 an ounce.

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