Gold eases as dollar surges on Powell’s reassurance on inflation
· Gold prices eased on Wednesday, as the dollar touched a more than two-week high after U.S. Federal Reserve Chair Jerome Powell reassured Congress that inflation would not spiral out of control.
· Spot gold was slightly down at $1,726.78 per ounce by 0129 GMT. U.S. gold futures rose 0.1 % to $1,726.70 per ounce.
· The dollar index rose, while Treasury yields fell after Powell told U.S lawmakers on Tuesday he expected inflation to rise over the year but it would be “neither particularly large nor persistent.”
· Treasury Secretary Janet Yellen said the U.S. economy remains at risk as she fielded lawmakers’ questions about possible infrastructure and tax increase plans under consideration.
· Fed will show “resolute patience” in waiting to meet its employment and inflation goals before pulling back on support for an economy still healing from the pandemic, Fed Governor Lael Brainard said on Tuesday.
· Asian stocks were poised to follow Wall Street lower, as the expense of the United States’ stimulus and infrastructure plans, as well as new pandemic precautions, constrained investors’ risk appetite.
· An expansion of Japan’s factory activity gathered pace in March, a private sector survey showed on Wednesday.
· SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.6% to 1,045.36 tonnes on Tuesday.
· XAU/USD not out of the woods yet, slide to $1700 remains on the cards
A combination of factors assisted gold to gain some traction on Wednesday. The uptick lacked follow-through and remained capped near 200-hour SMA. The set- favours bearish traders and supports prospects for further weakness.
· Spot gold neutral in $1,716-$1,746 range
A break below $1,716 could cause a fall into the $1,669-$1,691 range.
Spot gold looks neutral in a range of $1,716 to $1,746 per ounce, an escape could suggest a direction.
A break below $1,716 could cause a fall into the $1,669-$1,691 range.
However, the bias could be towards the upside, as the metal managed to consolidate below a falling trendline, instead of dropping deeply towards the March 8 low of $1,676.10.
Such a behaviour indicates that bulls have not given up testing the resistance at $1,746. A break could open the way towards $1,761-$1,783 range.
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· Palladium was little changed at $2,602.24 , Silver rose 0.2% to $25.13 and platinum fell 0.5%, to $1,162.13.
Reference: CNBC, FXstreet
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