Gold News

Gold Price Bounces from Brief 7-Week Low as Greece Meets Lenders, US Fed's Yellen Speaks to Congress

GOLD PRICE losses of 1.1% were swiftly reversed Tuesday afternoon in London, with the metal rallying back to $1200 per ounce after a sudden 7-week low when US Federal Reserve chair Janet Yellen began her semi-annual testimony to Congress in Washington.
Eurozone finance chiefs meantime met again in Brussels to discuss the new Athens' government's formal offer of austerity measures to extend the current package of bail-out loans to Greece.
Greek equities jumped again, rising a further 7% to hit 3-month highs, while major Eurozone stock markets added 0.7% for the day.
"Safe haven demand [is] supportive" of gold prices, says a new note from French investment bank and London bullion market maker Societe Generale, "but upside is capped by likelihood of tightening US monetary policy."
Saying that the US central bank is reviewing the possibility of raising its key interest rate from zero "on a meeting by meeting basis," Yellen's testimony initially saw 10-year US Treasury bond yields spike up to a 1-week high of 2.10%.
Gold price benchmark the London PM Fix meantime recorded its lowest Dollar level since 5th January at $1190.50 per ounce.
But yields then retreated, and the spot gold price bounced to $1200, as Yellen added that the Fed will "raise short-term interest rates when it becomes appropriate to do so" before saying she strongly opposed Republican politcians' calls to audit the Fed.
Following news meantime that the US Department of Justice is investigating 10 or more major banks for possible manipulation of gold prices, Swiss competition commission WEKO said it is investigating the benchmark London Fix.
"Erosion of the 3-month uptrend leaves gold on the defensive," says Germany's Commerzbank of the Dollar gold price in its weekly technical analysis report.
But for gold priced in Euros, this week's "dip has extended towards the 55-day moving average. We look for some stabilisation in this vicinity."
The Euro today dipped again below $1.13 before rallying almost 1 cent against the Dollar as Yellen continued her testimony to Congress.
"Asia remains a non event with the Chinese still on their New Year celebrations," says Swiss refinery and finance group MKS's trading desk.
The Shanghai Gold Exchange will open tomorrow for the first time since the Chinese New Year's Eve a week ago.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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