Opinion with Peter Hug
Higher Yields Continue To Dampen Enthusiasm For Gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
(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 Fedâ€™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.