Gold Steady As U.S. Dollar Strengthens
…Comex April gold up 50 cents at $1,290.30/oz
…Stronger dollar weighs on gold prices
…Gold traders optimistic after Yellen testimony
NEW YORK – Gold futures paused their rally on Wednesday amid a stronger dollar and as investors continued to assess the likely path of U.S. monetary policy following Federal Reserve Chairwoman Janet Yellen’s testimony to Congress.
The most actively traded contract, gold for April delivery, was recently up 50 cents at $1,290.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold futures pared early gains as the dollar strengthened against a basket of international currencies. The ICE Dollar Index was recently up 0.2% at 80.77. Gold is traded in dollars and becomes more expensive for investors who use other currencies when the dollar strengthens.
“The dollar turning as high as it is is giving gold a brief pause,” said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.
Investors also continued to digest Fed Chairwoman Yellen’s inaugural testimony to Congress for new insight into the longevity of the central bank’s bond-purchasing program. Gold prices had plunged 28% in 2013 as many investors anticipated the Fed would begin unwinding its accommodative policies, a process the central bank announced in December.
On Tuesday, gold initially retreated after Ms. Yellen’s prepared remarks focused on continuity in monetary policy. The Fed chief said only a notable change in the economic outlook would warrant halting stimulus reductions. However, gold rocketed to a three-month high after Ms. Yellen tempered that sentiment during her question and answer session. The new Fed chief told lawmakers that the stimulus reductions are not on a preset course and she is prepared to act should economic data warrant it.
“She appears to be following closely in the footsteps of former Fed Chairman Ben Bernanke, which is not surprising and does favor the dovish monetary-policy camp,” said Jim Wyckoff, a senior analyst with precious-metals dealer Kitco.com.
– WALLSTREET JOURNAL