The bullion dropped around 1% on Tuesday and continued to trade under pressure on Wednesday as the greenback regained ground after somewhat hawkish Powell’s testimony. The precious metal was trading near 1,318 USD during the London session on Wednesday.
Jerome Powell had a premiere yesterday and he testified on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC. He acknowledged the good state of the US economy and also confirmed inflation will most likely rise to 2% later in this year. Powell also said he sees some high prices (probably meant valuations on the US stock market), which sank stocks. Overall, his first public appearance sounded positive and slightly more hawkish and bonds, bullion and stocks were sold, while the greenback rallied.
The market now fully priced in three rate hikes this year, although the more optimistic investors are expecting at least one more. This is not priced in yet.
Today’s US calendar will contain the preliminary GDP reading for the final quarter of 2017, which is projected to stay near 2.6%. This might also be gold negative.
Gold is now nearing the important support around 1,308 USD and if broken, the bullion might deteriorate to the psychological level of 1,300 USD. On the other hand, the resistance is seen slightly below 1,325 USD and if bulls will be stronger, the next selling zone appears to be near 1,335 USD. In all cases we strongly recommend to have rigorous money and risk management.
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