Gold Bobbled By Hoenig Speech, Temporarily

Thomas Hoening, the Fed's resident hawk, gave a CNBC interview in which he repeated his hawkish stance. He "reiterated in a televised interview on the cable channel CNBC that the Federal Reserve should not guarantee zero-percent interest rates for an extended period."


That news wasn't so good for the U.S. stock market, but it had little effect on gold. After slumping from $1,129.50 down to $1,124, spot gold climbed back up again. $1,133.90 was reached just after 10:45 AM ET.

The gold market looks like it's focusing on global inflation, particularly the possibility that a Euroland bailout will be accompanied by ease from the European Central bank. The Australian central bank's most recent rate hike, to 4%, went unnoticed by the gold market. The People's Bank of China raising its rate would attract more attention, but the February reserve-rate hike has been shrugged off. The next scheduled announcement period for the PBoC is a little more than a week away.

It could be that the gold players have sized up Hoenig as a mere voice in the wilderness, which would make them more cyncial than stock players in the matter.