• Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday after U.S. President Donald Trump's speech to Congress.
The most active gold contract for April delivery fell 3.9 U.S. dollars, or 0.31 percent, to settle at 1,250.00 dollars per ounce.
• This drove U.S. equities sharply higher. The U.S. Dow Jones Industrial Average rose by 337.90, or 1.62 percent as of 1905 GMT. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.
• Gold was put under further pressure as the U.S. Dollar Index rose by 0.34 percent as of 1905 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
• President Trump's speech has dramatically impacted expectations for a rate hike at the next Federal Open Market Committee (FOMC) meeting. Investors now believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting.
According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 66 percent at the March meeting and 72 percent for the May meeting.
• A report released by the Institute for Supply Management on Wednesday also put pressure on the precious metal as its ISM manufacturing index increased by 1.7 points to a 57.7 level, a figure which analysts note was both stronger-than-expected and also the highest rate of growth in this measure since August 2014. This, combined with the above factors, contributed to the pressure that was put on gold on Wednesday.
• Tuesday evening’s speech by U.S. President Donald Trump to the U.S. Congress was deemed to be very optimistic and much more “presidential” than some of his campaign or press conference rhetoric, and that worked to assuage the world marketplace and add to a big “risk-on” trading mentality in markets Wednesday. World stock markets were mostly higher Wednesday, with U.S. stock indexes scoring their best daily gains of the year and soaring to record highs.
• U.S. Federal Reserve officials, including Chair Janet Yellen, are speaking this week. New York Fed President William Dudley on Tuesday said the case for raising U.S. interest rates “has become a lot more compelling.” San Francisco Fed President John Williams also said on Tuesday that a March rate hike is “very much on the table for consideration.” Yellen speaks on Friday.
• Technically, April gold futures prices closed nearer the session high. The gold bulls have the overall near-term technical advantage. Prices are in a nine-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,275.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,225.00. First resistance is seen at this week’s high of $1,264.90 and then at $1,270.00. First support is seen at today’s low of $1,237.20 and then at $1,226.80. Wyckoff's Market Rating: 6.0
• Silver for May delivery rose 2 cents, or 0.11 percent, to close at 18.489 dollars per ounce.
Reference: Xinhua, Kitco
Thai
Eng