Demand for the US treasury yields returned with the US dollar’s following hawkish comments from Fed Chair Yellen, knocking-off gold to the levels unseen since last Friday.
Gold drops sharply from near multi-week tops
Currently, gold drops -1.05% to 1199.30, recovering quickly from fresh five-day lows struck at $ 1197 last minutes. The overnight retreat in gold gained traction in the mid-Asian trades, after the Asian traders boosted bids for the US treasury yields at the expense of the non-interest paying gold, as they continue to digest Fed Chair Yellen’s hawkish remarks.
Yellen noted in her scheduled speech that ‘It makes sense to reduce monetary policy accommodation gradually as economy approaches Fed's goals’.
Higher treasury yields pushed the greenback higher across the board, fueling declines in the USD-sensitive gold. Meanwhile, the USD index turns positive on the day to trade around 101.33 levels.
Markets now await the ECB policy decision and a host of US macro updates due later today, while we will have more of Yellen tomorrow ahead of Trump’s inauguration as the US 45th President.
Comex Gold Technical Levels
The metal has an immediate resistance at 1205.85 (5-DMA) and 1210 (round figure). Meanwhile, the support stands at 1197 (5-day low) below which doors could open for 1195 (key support).
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