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Higher Yields Continue To Dampen Enthusiasm For Gold

Commentaries & Views

(Kitco News) - Gold remains under pressure as higher bond yields have attracted flows into the U.S. dollar. The U.S. government is auctioning off a massive amount of U.S. debt and tepid demand may push yields higher and continue to maintain flows into the dollar. We remain neutral on the short-term optics for gold, after suggesting liquidation of long positions at the $1,358 level late last week. We look at the $1,335 area for initial support, with a close below this level suggesting a test of the $1,322 area. First resistance lies at $1,347. Expect volatility during the auction process and into tomorrow where the release of the FOMC meeting minutes for January will have traders looking for clarity on how aggressively the Fed will be in the 2018 tightening cycle. With the volatility in the equity space, the Fed may be less inclined to proffer an aggressive policy and may fall back to the jargon that policy will be determined by economic data. The language on the Fed’s concern over recent increases in the inflation gauges will be the key pivot for traders. If the Fed remains behind the curve, gold should see renewed buying interest.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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