Gold posted modest gains in Asia on Tuesday ahead of remarks by Fed chief Janet Yellen to set the tone ahead of the April rate meeting.
Yellen speaks Tuesday in a much anticipated midday appearance before the Economic Club of New York — just days after several Fed officials surprised markets by saying a rate hike could be coming soon. The problem is that the U.S. central bank on March 16 released a post-meeting statement that markets viewed as dovish, and most Fed watchers see June as the first time it would consider raising rates.
Last week, hawkish comments from several Fed officials put investors on guard for the possibility of at least two rates increases this year, triggering a widespread correction across commodities and bolstering the dollar.
Gold clung to small overnight gains on Tuesday to hold above a one-month low, supported by a softer dollar and weak U.S. economic data that dented expectations of an immediate hike in U.S. interest rates.
Bullion was in demand after the dollar fell on disappointing data on the U.S. economy.
The disappointing outcome dimmed expectations for an imminent hike in U.S. interest rates, which some Fed officials last week said could be as early as next month if the economy maintained its momentum.
Last week, hawkish comments from several Fed officials put investors on guard for the possibility of at least two rates increases this year, triggering a widespread correction across commodities and bolstering the dollar.
Gold prices are ended the U.S. day session slightly lower Monday, and did notch a five-week low overnight. Less risk aversion in the marketplace to start the trading week is a negative for safe-haven gold. Also, the recent selling pressure in gold has invited chart-based selling from the shorter-term futures traders. June Comex gold was last down $1.60 at $1,221.90 an ounce. May Comex silver was last up $0.006 at $15.205 an ounce.
Technically, June gold futures prices closed nearer the session high and did hit a fresh five-week low early on today. Gold bulls still have the overall near-term technical advantage, but are fading badly and need to show fresh power very soon. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,250.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at today’s high of $1,225.10 and then at $1,230.00. First support is seen at last week’s low of $1,212.60 and then at today’s low of $1,207.70. Wyckoff’s Market Rating: 6.0
The big economic data point of the week will be Friday’s U.S. employment report from the Labor Department. Markets may be quieter ahead of that key report.
Reference: CNBC, Kitco, Reuters
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