Gold price manages slim early gain, looks to snap four-day slide
London (Feb 15) Gold futures tipped higher Wednesday, trying to snap a string of four straight losses as relatively hawkish comments from Federal Reserve Chairwoman Janet Yellen on the nation’s interest-rate picture sent the dollar higher.
Gold could remain vulnerable near term as the dollar retained its strength and Yellen headed back to Capitol Hill for a second day of testimony.
April gold GCJ7, +0.17% rose $2.60 to $1,227.90 an ounce.
The ICE U.S. Dollar Index DXY, +0.22% , which touched a four-week high in the wake of Yellen’s comments, was up 0.2% Wednesday.
Yellen hinted to the Senate Banking Committee on Tuesday that the central bank could gradually raise interest rates sooner rather than later. Her upbeat assessment of the economy also cheered risk-on investors, sending them into stocks away from haven investments including gold.
When asked during her testimony if the Fed will hike rates in March or June, Yellen said the central bank has penciled in three interest-rate hikes this year but also said she couldn’t say if the Fed will take action in March or May or June.
“According to the Fed fund futures, however, the probability of a rate hike in March has risen only slightly to 34%,” said Carsten Fritsch and team, commodities analysts, at Commerzbank. “The majority of market participants do not expect the next rate hike before May.”
Yellen will be back on Capitol Hill to appear before the House Financial Services panel at 10 a.m. Eastern Time.
U.S. stocks look set to hang onto record highs at the open Wednesday, but futures hinted at a struggle to push much higher on a data-heavy day. Gold and stocks often move inversely.
Consumer prices and retail sales for January are set for release at 8:30 a.m. Eastern Time, along with the Empire state index for February.
Later, at 9:15 a.m. Eastern, updates on industrial production and capacity utilization in January are due. A home builders’ index for February and business inventories for December are coming at 10 a.m. Eastern.
March silver SIH7, -0.02% was just in the positive, up less than 0.01%, to $17.889 an ounce. March copper HGH7, +0.09% was up less than a cent, or 0.1%, to $2.74 a pound.
The exchange-traded fund SPDR Gold Trust GLD, +0.11% rose less than 0.1% premarket, while the iShares Silver SLV, +0.71% tacked on 0.4%. The VanEck Vectors Gold Miners ETF GDX, -0.56% lost 0.3.
“As the mandatory filings to the SEC show, a number of hedge funds and investment companies reduced their holdings in the SPDR Gold Trust in the fourth quarter in the wake of falling gold prices – which recorded their most pronounced quarterly decline in 3½ years,” the Commerzbank analysts said. “One prominent example is Paulson & Co. The SPDR Gold Trust saw outflows of a good 4 million ounces, that is to say nearly 126 tons, in the fourth quarter.”
Source: MarketWatch
