Gold has dipped to three-and-a-half-week low as expectations rise that the US federal Reserve will lift interest rates as early as June, but prices came off their lows as late-day short-covering entered the market.
Gold held a four-day decline as more Federal Reserve officials weighed in with comments that supported the case for higher borrowing costs, strengthening the outlook for the dollar and denting the metal’s allure.
Bullion for immediate delivery traded at $1,248.20 an ounce at 9:15 a.m. in Singapore, from $1,249.13 on Monday, when it fell 0.2 percent to the lowest close since April 27, according to Bloomberg generic pricing. It’s dropped for the past three weeks as the U.S. currency has advanced.
Gold dipped in Asia on Tuesday with a steady parade of Fed statements on the outlook for interest rate hikes this year adding to a bearish tone.
The latest signal came from Philadelphia Federal Reserve Bank President Patrick Harker who said Monday that two to three rate hikes are possible this year if the economy continues to grow as projected.
Overnight, gold fell mildly on Monday to hit a fresh 3-week trough, amid hawkish sentiments from a pair of Federal Reserve policymakers on the likelihood for a gradual increase in short-term interest rates over the next year, providing further downward pressure on the precious metal.
Gold extended last week's losses in overnight trading after Federal Reserve Bank of St. Louis president James Bullard reiterated that the U.S. central bank has a plan in place to raise rates gradually if the economy improves as expected.
Speaking at the of the Official Monetary and Financial Institutions Forum in Beijing, Bullard emphasized that he sees more factors in favor of a series of slow rate increases than no hikes at all, as the Federal Open Market Committee (FOMC) prepares for a critical interest rate decision in three weeks.
Technically, June gold futures prices closed near mid-range today. The gold still bulls have the overall near-term technical advantage but have faded. Prices are in a three-week-old downtrend on the daily bar chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,290.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,225.00. First resistance is seen at today’s high of $1,256.80 and then at $1,262.30. First support is seen at today’s low of $1,243.50 and then at $1,240.00. Wyckoff’s Market Rating: 6.5
Reference: Business News, Bloomberg, Investing, Kitco
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