Gold Traders Focus On Yellen?s Testimony
Today’s Spotlight Market
Gold traders are anxiously awaiting to hear Fed Chairwoman Janet Yellen’s testimony in front of the Senate Banking Committee. Market observers are looking for hints as to when the FOMC will raise interest rates. It is doubtful she will show the Fed’s hand, but she may be painted into a corner by the Senators and reveal something. Gold has been under pressure in recent weeks due to speculation that the Fed will begin raising interest rates mid-year, which would likely curb inflationary pressures and could adversely impact growth. Dovish testimony from the Fed Chairwoman could give bulls a reprieve.
Fundamentals
Physical demand for Gold has been lackluster and has failed to inspire the bull camp. In China,? the real savings rate (bank interest minus inflation) is steadily climbing, giving Chinese households less motivation to invest in Gold.? China has been a major player in the Gold market in recent years and indications that household investment could be stalling is not good news for bulls. Now that an agreement has been reached on Greek debt, that cushion has disappeared for Gold traders. The Russian/Ukrainian situation had failed to offer a downside buffer to the precious metals market. The same can be said for President Obama’s pledge to step up military action versus ISIS. Investors have been saturated with news on both fronts, so traders may be a bit indifferent to fresh news, barring a major escalation.? In the near-term, Gold may be more sensitive to currency fluctuations and interest rate speculation rather than geopolitical events. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the April Gold contract trading near the 1200 mark over the past several sessions.? Given the preceding down move in the market over the past month to month and a half, the bias seems to be to the downside out of this consolidation.? Prices could test 1175 on the downside or, possibly, even the 1150 level.? The recent breakdown below the major moving averages sets a negative tone for the market.? The result of recent price declines has been oversold conditions on the RSI indicator, which may offer some support for prices.
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