Gold price settles in anticipation of Yellen’s testimony, Dollar strengthens over Trump-Abe talks
The gold price calmed its short-term bull run today, as two major talking points rallied other markets. Spot gold was down to $1,225.84/oz at 02:30 GMT and gold futures inched up 0.1% to $1,226.8.
This comes after markets rallied in accordance with political events over the weekend, notably Trump’s meeting with Japan’s prime minister, Shinzo Abe, and his announcement on domestic tax policy.
Trump had previously been antagonistic towards Japan, saying the country was a threat to American jobs and overly benefitted from American security aid. However, this meeting showed a far friendlier and more diplomatic relationship between the two.
Trump has also switched the weight of his rhetoric away from trade protectionism and towards tax-reform. Last Friday he proclaimed he was ‘on the verge of announcing the most ambitious tax reform since the Reagan-era’, according to the Independent.
Market indicators took the news well, with Dailyfx noting that ‘[US Dollar] prices are trading directly below last week’s high of 100.96. If prices breakout above this point, the US Dollar may next attempt to rally towards the January 19th swing high found at 101.67’. Bond yields and stock markets were also kept afloat by the news, according to bullionvault.
Another factor that contributed to putting the gold price on hold is the testimony of Janet Yellen, who is due to appear before congress today and Wednesday. According to ANZ analyst Daniel Hynes, ‘The commentary will be keenly followed. Any guide to whether (a rate hike in) March is on the table will be key to moving gold’, he told thehindubusinessline.
Moreover, thehindubusinessline also reported that Robert Kaplan, Dallas Fed president, stressed the need to raise rates soon, or the speed of the hike would have to increase. This does not bode well for the gold price, which typically has a sensitive inverse relationship to US interest rates.
Link to this article: : http://www.goldmadesimplenews.com/gold/gold-price-settles-in-anticipation-of-yellens-testimony-dollar-strengthens-over-trump-abe-talks-12972/