Gold Futures Score First Gain In Four Sessions
Gold futures scored their first gain in four sessions on Wednesday, buoyed by comments from Federal Reserve Chairwoman Janet Yellen, a weaker U.S. dollar and signs of rising demand from China.
Gold had dropped to an intraday low on Tuesday after Yellen’s prepared remarks, read as hawkish, but later recovered much of that sharp slide, though it still suffered a third straight session of losses, settling down about $3.50 to $1,197.30 an ounce on Tuesday.
During the second day of testimony Wednesday, Yellen continued to stress that normalization of interest rates would begin when the committee is confident inflation is on track to reach the Fed’s target. The dollar DXY, -0.27% inched lower against its main trading partners following the testimony, adding further support to dollar-denominated gold prices. See the live blog of Wednesday’s testimony.
The Fed chief sounded dovish and “has done a good job in not providing exact timing of a hike in the interest rate, which is supporting the gold price,” said Naeem Aslam, chief market analyst at Ava Trade.
Federal Reserve Chairwoman Janet Yellen testifies to Congress supporting the view that an interest rate hike is unlikely before June, indicating that the Fed will consider rate hikes on a “meeting-to-meeting basis.”
The next Fed meeting, however “could be extremely important as they will have a more clear picture of inflation, especially as the oil price is stabilizing, and they will also have the U.S. non-farm payroll data for this month,” said Aslam. The next Fed meeting is set to begin on March 17.
Meanwhile, the preliminary HSBC China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, showed a marginal improvement. The index rose to 50.1 in February, compared with a final reading of 49.7 in January.
Premiums on the Shanghai Gold Exchange rose $5 to $6 an ounce over global spot gold prices overnight, a sign of strong demand from China, according to Mark O’Byrne, a director at GoldCore. That’s up from a premium of $3 to $4 before the Lunar New Year break, he said.
Other metals traded on Comex settled higher. April platinum PLJ5, +0.74% rose $6.20, or 0.5%, to $1,168.80 an ounce, while March palladium PAH5, +2.24% gained $18.05, or 2.3%, to $808.05 an ounce. March copper HGH5, +0.59% added 1.6 cents, or 0.6%, to settle at $2.664 a pound.