Kaloti Precious Metals-Morning Market Report-Thursday, April 06, 2017

Market Daily & Weekly

Note: Indications only, open and closing prices are bids; Data source: Bloomberg; Times as per Dubai

Fundamentals and News

Gold Pares Losses as Fed Minutes Show Plan to Trim Balance Sheet

Gold pared losses after minutes of the Fed’s policy meeting in mid-March showed officials plan to start shrinking the balance sheet, which traders said suggests a less aggressive tightening path.

Most Federal Reserve officials said they backed a policy change that would begin shrinking the central bank’s $4.5 trillion balance sheet later this year, as they reiterated their outlook for gradual interest-rate increases.

“Many participants emphasized that reducing the size of the balance sheet should be conducted in a passive and predictable manner,” the minutes showed.

The record provides an outline of the discussion U.S. central bankers held before approving a quarter-point increase in their benchmark lending rate.

The minutes hew closely to Chair Janet Yellen’s account of the monetary-policy discussion laid out at her news conference after the rate-hike announcement. Yellen emphasized at the time the hike in rates didn’t reflect a “reassessment of the economic outlook or of the appropriate course for monetary policy.”

In materials released with the FOMC statement, officials stuck to a median projection for three total rate increases in 2017.

The minutes showed nearly all of the officials judged the economy was at or near full employment, and nearly all voting members believed inflation was still short of the Fed’s 2 percent target.

Unemployment stood at 4.7 percent in February, at or near most economists’ estimates of its lowest sustainable level. The Fed’s preferred measure of prices rose 2.1 percent in the 12 months through February, the first time it’s topped the central bank’s 2 percent target in almost five years.

As part of their discussion of the economy, many Fed officials observed a rise in equity prices in recent months as contributing to an easing in financial conditions.

“Some participants viewed equity prices as quite high relative to standard valuation measures,” the minutes said. It was also observed that “prices of other risk assets, such as emerging market stocks, high-yield corporate bonds, and commercial real estate, had also risen significantly in recent months.”

The target range for the benchmark federal funds rate is 0.75 percent to 1 percent. The FOMC schedules eight meetings a year with the next set for May 2-3 in Washington.

Spot gold little changed at 3:40 p.m. in New York, after dropping as much as 1% earlier

A gauge of the U.S. dollar was little changed; earlier climbed as much as 0.2%

Stocks dropped, Treasury yields declined

Data Forthcoming Releases

Courtesy: http://kalotipm.com.sg/kaloti-market-report-6th-april-2017