Gold rises on dollar weakness, dovish comments from Fed’s Powell
· Gold gained on Wednesday, hovering close to a one-week high hit in the previous session, as a weaker dollar and remarks by Federal Reserve Chair Jerome Powell that the U.S. economy still needed support boosted bullion’s appeal.
· Spot gold rose 0.2% to $1,808.65 per ounce by 0352 GMT, after hitting its highest since Feb. 16 at $1,815.63 on Tuesday.
· U.S. gold futures gained 0.2% to $1,809.10.
· “Powell was just credible enough on his dovishness... so gold had more room to breathe,” said Stephen Innes, chief global market strategist at financial services firm Axi, adding that a weaker dollar was also supporting prices.
Powell told the U.S. Senate Banking Committee that monetary policy still needed to be accommodative with economic recovery “uneven and far from complete”. His testimony continues later in the day.
Further supporting gold, the dollar eased against rivals, while benchmark 10-year U.S. Treasury yield also fell.
In the near term, gold will continue to react to the moves in bond yields, Innes said.
Easy monetary policy tends to weigh on government bond yields, increasing the appeal of non-yielding gold.
A depreciation in the U.S. dollar and potential impact of inflation as a result of stimulus measures will be key drivers for gold, he added.
· Gold bulls are back
The fact the gold price is trading above the 1,800 is a positive sign anyway and as long as the price continue to trade above this price level, we are likely to see some more gains.
As for the RSI, it is approaching fast near the overbought zone and this means that the gold price is over bought. Hence traders may want to adopt some cautious approach.
· Investor focus remains on a $1.9 trillion coronavirus relief aid that is expected to pass later this week.
· Among other precious metals, silver rose 0.4% to $27.72 an ounce.
· Platinum climbed 0.8% to $1,246.76.
· Palladium added 0.1% to $2,352.86.
Reference: CNBC, FXStreet
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