LONDON — Gold edged back below $1,240 an
ounce on Wednesday as investors cashed in some of the previous day’s
1.7% gains, sparked by US Fed chair Janet Yellen’s indication that she
remained cautious about further interest rate hikes.
In her first
comments since the Federal Reserve opted to keep rates on hold two weeks
ago, Ms Yellen said inflation has not yet proven durable against the
backdrop of global risks to the US economy, including depressed oil
prices and worries over China.
Fading expectations for further hikes weighed on the dollar and buoyed gold prices, which came under pressure last year from anticipation that rates would rise. Higher rates increase the opportunity cost of holding nonyielding assets, such as gold.
Spot gold was at $1,237.66 an ounce at 10.30am GMT, down 0.3%, having risen 1.7% on Tuesday after Ms Yellen’s speech. US gold futures for April delivery were up $2.50 an ounce at $1,238.30.
Ms Yellen’s remarks came after a string of hawkish comments from Fed officials last week that prompted a 3% slide in gold prices.
"Yellen surprised the market by her dovish comments after more aggressive comments from other FOMC members last week," Saxo Bank’s head of commodities research Ole Hansen said. "The combination of a weaker dollar, reduced rate hike expectations and lower bond yields remain the key positive drivers for gold.
"Coming out of a very strong quarter, I’m a little concerned that we may have to look towards the third quarter for additional gains," he added. "We saw profit taking in ETFs yesterday after the run-up and this, combined with a very rapid build up in futures longs, could indicate a longer period of consolidation."
Holdings of the world’s biggest gold-backed exchange-traded fund, SPDR Gold Shares, declined for the first day in two weeks on Tuesday, by 3.3 tonnes.
The dollar index edged off early lows on Wednesday, though it remained down 0.2%. Focus is now shifting to the main US jobs data later this week.
"Though the rally looks intact, it can be dented by a good employment number in the nonfarm payrolls release for March scheduled for Friday," HSBC said in a note. "A number above 200,000 new net jobs could wear on gold and clip recent gains."
Among other precious metals, silver was up 0.2% at $15.38 an ounce, platinum was up 0.1% at $968.50 an ounce and palladium was up 0.1% at $574.05 an ounce.
Reuters
Fading expectations for further hikes weighed on the dollar and buoyed gold prices, which came under pressure last year from anticipation that rates would rise. Higher rates increase the opportunity cost of holding nonyielding assets, such as gold.
Spot gold was at $1,237.66 an ounce at 10.30am GMT, down 0.3%, having risen 1.7% on Tuesday after Ms Yellen’s speech. US gold futures for April delivery were up $2.50 an ounce at $1,238.30.
Ms Yellen’s remarks came after a string of hawkish comments from Fed officials last week that prompted a 3% slide in gold prices.
"Yellen surprised the market by her dovish comments after more aggressive comments from other FOMC members last week," Saxo Bank’s head of commodities research Ole Hansen said. "The combination of a weaker dollar, reduced rate hike expectations and lower bond yields remain the key positive drivers for gold.
"Coming out of a very strong quarter, I’m a little concerned that we may have to look towards the third quarter for additional gains," he added. "We saw profit taking in ETFs yesterday after the run-up and this, combined with a very rapid build up in futures longs, could indicate a longer period of consolidation."
Holdings of the world’s biggest gold-backed exchange-traded fund, SPDR Gold Shares, declined for the first day in two weeks on Tuesday, by 3.3 tonnes.
The dollar index edged off early lows on Wednesday, though it remained down 0.2%. Focus is now shifting to the main US jobs data later this week.
"Though the rally looks intact, it can be dented by a good employment number in the nonfarm payrolls release for March scheduled for Friday," HSBC said in a note. "A number above 200,000 new net jobs could wear on gold and clip recent gains."
Among other precious metals, silver was up 0.2% at $15.38 an ounce, platinum was up 0.1% at $968.50 an ounce and palladium was up 0.1% at $574.05 an ounce.
Reuters
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