Financial conditions have tightened considerably in the weeks since the Federal Reserve raised rates and monetary policy makers will have to take that into consideration should that phenomenon persist, William Dudley, president of the Federal Reserve Bank of New York, told MNI in an interview.
Those comments dragged down the dollar overnight, adding to market expectations that the Fed is unlikely to raise rates again in March. U.S. rates rose for the first time in nearly a decade in December.
Also cooling U.S. rate hike views, activity in the U.S. services sector slowed to a near two-year low in January, suggesting that economic growth weakened further at the start of the first quarter even as the labour market remains resilient.
The weaker dollar plus hopes that U.S. rates would remain unchanged next month boosted gold, which has risen nearly 8 percent this year. Volatility in other assets also burnished gold's appeal.
Holdings of top gold-backed exchange-traded fund, SPDR Gold Trust, continued to rise, standing at 22.19 million ounces on Wednesday, the highest since late October.
- Gold prices ended the U.S. day session solidly higher and scored another three-month high Wednesday. Once again, safe-haven and chart-based buying supported the yellow metal amid a still-uneasy world marketplace. Gold bulls also have building technical momentum on their side.
Technically, February gold futures prices closed nearer the session high. Prices are in a choppy six-week-old uptrend and the bulls have technical momentum on their side. Bears still have the slight overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,150.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at this week’s low of 1,115.30. First resistance is seen at today’s high of $1,143.00 and then at $1,150.00. First support is seen at $1,130.00 and then at today’s low of $1,124.80. Wyckoff’s Market Rating: 4.5
Reference: Kitco, Reuters
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