Marex Spectron Bullion Thoughts
Good morning,
Gold did not react initially to the FOMC minutes last night and the dollar actually rallied in the aftermath, which just goes to show how markets are attempting to read things into, what is in effect very little!! If you read through the minutes (well, some of them, I wouldn’t recommend attempting the whole thing!), the message is so mixed as to be completely neutral. Risks are highlighted, which we already know about, but rate increases are on the cards, which we already know about. Far more important was the fact that the market was very long of dollars and this more than anything is the reason the dollar has slumped overnight. Gold has benefited from this move and is at its highest point for almost a month. January is more often than not a positive month for gold and this may well happen again, but as I said yesterday, we are governed by the greenback and this will dictate the direction regardless of sentiment and history.
Overall, I can see the dollar pullback continuing as people unwind positions in the run up to the Presidential inauguration and if this does happen then gold may have legs to 1200. Today brings us the joys of ADP employment at 13:15 London time, followed swiftly by Initial Jobless Claims at 13:30. Markit PMI is released at 14:45 and then finally the ISM non-manufacturing composite at 15:00. So plenty of scope for dollar moves and in turn, gold as well.