Gold held on to sharp overnight gains on Wednesday, buoyed by a softer dollar and Federal Reserve chair Janet Yellen's remarks that the U.S. central bank should be cautious in raising interest rates.
Spot gold XAU= was little changed at $1,241.94 an ounce by 0025 GMT, after gaining 1.7 percent on Tuesday.
Yellen said on Tuesday that the Fed should proceed only cautiously as it looks to raise interest rates, pushing back on a handful of her colleagues who have suggested another move may be just around the corner.
In her first comments since the Fed decided to hold rates steady two weeks ago, Yellen said inflation has not yet proven durable against the backdrop of looming global risks to the U.S economy, including still-low oil prices and concerns over China.
Gold is highly sensitive to U.S. monetary policy, as rising interest rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar. The metal slid 3 percent last week after hawkish comments from a series of Fed officials.
Assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.40 percent to820.47 tonnes on Tuesday - the first drop in two weeks.
Gold prices shot solidly higher and to the daily high in midday trading Tuesday, in the immediate aftermath of the release of prepared remarks from Federal Reserve Chair Janet Yellen's speech to the Economic Club of New York. The marketplace is deeming Yellen's comments as fully dovish on U.S. monetary policy. Respected CNBC economist Larry Kudlow termed Yellen’s comments as “very dovish.” June Comex gold was last up $17.20 an ounce at $1,239.00. May silver was last up $0.08 at $15.27.
Gold prices were modestly weaker in overnight trading and then moved to modestly higher levels before Yellen’s comments hit the newswires and gave the yellow metal a big boost. Short covering and bargain hunting were featured in the gold market Tuesday, following the recent selling pressure that took prices to a five-week low on Monday.
Technically, June gold futures prices closed nearer the session high. Prices Monday hit five-week low. Gold bulls have the overall near-term technical advantage and regained some upside momentum today. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,264.10. 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 $1,242.00 and then at $1,250.00. First support is seen at $1,226.00 and then at today’s low of $1,217.00. Wyckoff’s Market Rating: 6.5
China's net gold imports via main conduit Hong Kong rose in February, from a 17-month low hit in the previous month, buoyed by restocking after Lunar New Year and strong investment demand.
Reference: Reuters, Kitco
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