Los Angeles CA, May 21 (Tangible Investments) - by James O'Dell - Gold and Silver prices edged higher on Wednesday, with Gold gaining $1.50 or 0.12 percent to close at $1,209.80 an ounce after the dollar fell 0.4 percent against a basket of major currencies following the release of the minutes of the April Federal Open Market Committee (FOMC) meeting, which indicated that a rate hike in June would be untimely given the recent spate of weaker than expected economic data. Silver added $0.01 to close at $17.12 an ounce while the Gold/Silver ratio inched up to 70.67.
A review of the Fed minutes suggests that policymakers felt it would be premature to raise interest rates in June, a view widely held in the marketplace. "Gold will benefit from the Fed's decision to postpone its rate hike and the bar for Gold's support level looks to be raised from here," says Phillip Futures' Howie Lee.
In the euro zone, it appears that Greece may soon sign a new funding agreement with its creditors, but economists at Capital Economics say that it could be just one more stop-gap measure. “The general sense appears to be that progress is finally being made," said Capital's economists. "And with Greece apparently having exhausted other recently-tapped sources of cash, the urgency to reach an agreement before scheduled IMF repayments in early June is at an all-time high.”
HSBC economists agree that Greece may have convinced its creditors to release a 1.9 billion euro portion of the final tranche of bailout funding, which would allow the nation to meet a massive repayment due in June to the International Monetary Fund (IMF).
“This is not the end of the Greek saga as the country will need a third program which appears even more challenging,” said HSBC economists. “While Greek sovereign debt developments have been less of an influence on Gold, when compared to years past, they nonetheless hold some influence on bullion given its perceived status as a safe haven asset," they added.
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