Janet Yellen confirms rate hike pace, dragging down the yellow metal. Gold dipped after two straight weeks of recovery on the strengthening USD.
20 December, AtoZForex – Gold prices are headed lower on Tuesday, after previously recovering for two consecutive sessions. Optimistic comments by Federal Reserve (Fed) Chairwoman Janet Yellen in relation to the US labor market have firmed the market view on the rate hike pace in 2017.
Janet Yellen confirms rate hike pace, gold drops
Spot gold dropped 0.2 percent to $1,136 per ounce by 0100 GMT. The US gold futures fell to $1,139.10, down 0.3 percent. The Chair of Fed, Janet Yellen has stated that the US job market has advanced to its strongest in almost a decade. She has highlighted that the wage growth is on the rise. Moreover, Janet Yellen stressed the expectations that the central bank will continue to raise interest rates in 2017.
Currently, the yellow metal is changing hands around $1133-32 regions, testing trade’s lows, on rebounded appetite for USD. Moreover, the Bank of Japan’s (BoJ) decision to keep its yield-curve and asset-purchase programs unchanged has weighed on gold prices. The BoJ status-quo monetary policy position has provided more support for hawkish Fed-driven USD strength.
Moreover, global markets’ expectations in relation to Fed interest rate pace in 2017 are driving flows away from USD-denominated commodities, such as bullion.
Will gold eventually rally into 2017?
Additionally, the new wave of risk-on sessions, with the majority of key EU equity indices shifting in positive direction, is further dragging the safe-haven assets down.
The US economic data would continue driving the investors’ Fed rate hike expectations. Market experts believe that this week, investors’ attention will be taken by the US data. The markets await the GDP print for Q3 2016, durable goods order, and Core PCE Price Index. Moreover, market participants eye the preferred inflation estimate from the US central bank. The data is expected to provide markets with hints on the USD direction.
According to experts’ views, gold is most likely to fall back to the $1127 support region. In case the precious metal would fall below this support level, the further deprecating move towards $1110 support levels in expected.
In case will manage to surpass $1137-38 level, the yellow metal might appreciate towards $1150, ahead of the next major resistance at $1158-60 region.
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