Gold Steadied near a two week high, its fifth straight session of gains- on speculation that the much anticipated Federal Reserve monetary tightening policy could be pushed to later this year.
Federal Reserve Chairwoman Janet Yellen Had earlier last week given the strongest indication yet that the Federal Reserve was in no hurry to raise the lending rates.
An increase in the lending rates would cut gold allure as its returns are exclusively through price gains.
Spot gold rose to its highest since March 6 at $1,195.15 according to the Bloomberg Generic pricing before slipping to trade most recently at a 0.1% low of $1,190.30.
Gold for April delivery, the most active contract, gained 2% at $1,189.40 an ounce on the Comex division of the New York Mercantile Exchange. The precious metal was on course for its longest winning streak since January buoyed by the weakening in the dollar.
“In the short term the dollar’s drawback is favorable for a rally in gold; we seem to target $1,200 on the upside, which is a strong resistance level,” Mitsubishi Corp strategist Jonathan Butler told Yahoo News.
“But investors could still apply the strategy of selling the rally.”
Gold had suffered earlier in the month on the robustness of the dollar after speculation of a hike in the country’s lending rates as early as June.
Gold traders, however, remain cautious as they focus on any shifts in the country’s monetary policy. The precious metal had earlier today pared gains after the release of a report showing growth in the country’s consumer price index.
While greater inflation would spur demand for gold as a hedge, traders worried that a higher inflation would be a sign of economic strength which would be a cue for the Federal Reserve to raise the Interest rates.
”There’s a lot of volatility in the currency markets since the Fed announcement last week, and that’s caused some uneasiness and given gold a lift,” Bob Haberkorn, a broker with RJO Futures in Chicago, told the Wall Street Journal.
To contact the reporter of the story: Jonathan Millet at firstname.lastname@example.org