Gold up as the US Secretary Janet Yellen Clarified on the Rate Hike

  • Commodities Analysis
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Gold yesterday settled up by 0.28% at 47000 as the dollar turned easy after U.S. Secretary Janet Yellen clarified that she was neither predicting nor recommending a rate hike. Treasury Secretary Janet Yellen clearly said that rates need to go up higher at some point in time. The key question is how fast they will rise as the Federal Reserve has remained quite dovish.
  
The Federal Reserve’s bond-buying does not appear to be creating imbalances in the financial sector, New York Fed Bank President John Williams (NYSE: WMB ) said. The Fed's monthly purchases of $120 billion in Treasury and mortgage bonds are working as designed to help the economy recover from the coronavirus pandemic's impact, Williams was told. “I don’t take for granted, even with the good news we’re seeing, that we’re going to get that full and robust recovery that we really want without really strong monetary policy support,” Williams told the Journal.
 
The positive impact of the bond buying in lowering long-term borrowing costs could become more important, Williams said, adding “I think the effects will even be greater in the sense of supporting strong growth over the next few years”. China's gold consumption in the first quarter rose 93.9% from the same period a year earlier to 288.2 tonnes, the China Gold Association said. Gold output in the January-March period fell 9.92% to 74.44 tonnes, the association said in a statement on its website.
  
Technically market is under short covering as the market has witnessed a drop in open interest by -1.06% to settled at 10263 while prices up 129 rupees, now Gold is getting support at 46752 and below same could see a test of 46503 levels, and resistance is now likely to be seen at 47148, a move above could see prices testing 47295.
  
Trading Ideas:
# Gold trading range for the day is 46503-47295.
# Gold settled higher as the dollar turned easy after U.S. Secretary Janet Yellen clarified that she was neither predicting nor recommending a rate hike.
# The Federal Reserve’s bond-buying does not appear to be creating imbalances in the financial sector, New York Fed Bank President John Williams said. # China's 2021 gold demand saw reverting to pre-pandemic levels – WGC official

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