Daily outlook for gold prices

Quotes from Commerzbank Corporates & Markets:

-For the first time since early January, the gold price briefly dipped below the psychologically important $1,200 per troy ounce mark again yesterday. Because the Chinese are celebrating their New Year Festival until the middle of next week, the market is short of one key purchaser. An easing of the debt dispute with Greece was weighing on gold. The country applied today for its aid programme to be extended.

-Nonetheless, it is unclear whether the government in Athens is willing to meet all the conditions that this would entail. Furthermore, the ECB has extended and topped up the emergency loans for Greek banks, thereby de facto allowing the Greek banking system to survive beyond the end of the week - the ultimatum set by creditor countries for Greece runs out on Friday - while at the same time reducing the pressure on the Greek government to work towards a quick agreement.

-In other words, there is still a considerable risk of no agreement being reached even after the ultimatum expires, which should lend support to gold. The later course of trading yesterday did then see a noticeable price recovery after all, gold trading this morning at around $1,220 per troy ounce.

-The publication of the minutes of the latest meeting of the US Federal Reserve was responsible for the rally, as they revealed that many FOMC members are inclined to maintain zero interest rates for a longer period of time. The biggest concerns clearly relate to the expectations of inflation. The ECB will be publishing the minutes of its most recent meeting for the first time today, though it is impossible to predict the impact this will have on the market.