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Wednesday, March 18, 2015

Precious metals turn pale

Gold settles at lowest levels since early November 


Bullion prices settled lower at Comex on Tuesday, 17 March 2015 at Comex. Gold futures settled on Tuesday at their lowest level since early November, as investors awaited the outcome of the two-day Federal Open Market Committee meeting for cues on the metal's next direction. The FOMC meeting concludes Wednesday with a policy statement and news conference. 

Gold for April delivery declined by $5, or 0.4%, to settle at $1,148.20 an ounce on Comex after settling higher for a third straight session on Monday. That was the lowest settlement for a most-active contract since early November 2015. 

Silver for the same month shed 3.9 cents, or 0.3%, to $15.578 an ounce. 

The highly anticipated meeting of the U.S. Federal Reserve's Open Market Committee (FOMC) began Tuesday and ends early Wednesday afternoon. The market place is wondering about the timing of the FOMC raising interest rates, with some reckoning a hike could come as early as June and others wondering if a rate increase will even occur this year. 

Many look for the Fed to take the word “patient” out of its statement, regarding when to decide to raise interest rates. The FOMC will also release its latest economic projections Wednesday, and Fed Chair Janet Yellen will hold a press conference after the FOMC meeting. 

Oil prices were weaker and Nymex futures poked to another six-year low Tuesday. An already glutted world oil market faces the prospect of Iranian oil exports re-entering the world supply equation. Western nations and Iran are presently meeting and trying to agree on a deal that would lift Western sanctions against Iranian oil. Slumping oil prices are a bearish underlying factor for most raw commodity markets, including the precious metals. 

The U.S. dollar index saw another corrective pullback Tuesday after hitting a 12-year high last week. 

U.S. economic data released Tuesday included new residential construction, which was a big miss on the downside. However, the weak data did not impact the precious metals markets significantly. February housing starts declined 17.0% to 897,000 from an upwardly revised 1.081 million (from 1.065 million) while the consensus expected a decline to 1.041 million. 

Record snowfall in the Northeast and extreme cold in the Midwest likely played a large part in curtailing new construction. Housing starts in these regions declined 45.0% in February, from 262,000 in January to 144,000. Those regions accounted for 64.0% of the entire February decline in housing starts.
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