Gold Increases ahead of Fed Speakers’ Remarks

Gold futures rose in European trade on Wednesday, as market players keep a close eye on remarks from a barrage of Federal Reserve officials, which will be released later in the day for more hints on the probability of future rate hikes.

On the COMEX division of the New York Mercantile Exchange, gold for April delivery climbed $4.60 or 0.38 percent, to trade at $1,227.20 per troy ounce. In the previous session, the yellow metal’s prices climbed $12.50 or 1.03 percent, as market players found support amid sharp plunges in oil prices and global markets.

A commodity analyst said, “Over the last week or so, gold has been in a phase of digestion as a ‘risk-on’ trade across assets, around the globe has seen demand for the safe-haven asset fade.”

Traders of the precious metal shifted their focus on speeches from three different Federal Reserve officials to judge the balance of opinion among policy makers on the prospect of more rate hikes.

As stated by a market analyst, “The sustainability of gold’s rally comes down to the Fed and the market pricing in only one or no rate increases this year.”

Dallas, Richmond, and St. Louis Federal Reserve Presidents are slated to release their remarks later in the day.

Federal Reserve Vice President Stanley Fischer stated on late Tuesday that it is still early to assess the implications of latest volatility in financial markets for the United States economy.

“In the very near term, volatility will continue to be the driver of the gold market and if risk appetites continue to fade this week, the well-defined uptrend in gold is poised to continue with key support laying between $1,190 and $1,200 an ounce.”

“As long as financial markets remain fragile and Fed rate hikes remain elusive, inflows will continue. It is a clear shift in investor sentiment and therefore an important sign,” an analyst said.

Spot gold prices have been well boosted in recent weeks amid rising speculation that the Federal Reserve could hold the pace of its tightening for the remainder of 2016.

Gold prices jumped to a one year high of $1,263.90 on February 11, as the yellow metal is up nearly 16 percent so far this year amid indications global economic and financial headwinds could make it hard for the Federal Reserve to elevate interest rates as much as it would like this year.

According to a commodity analyst, “Gold is rising on the back of weak risk appetite, but what stands out today is that the market is rising even though the dollar is higher as well. We’ve definitely reached a new range above $1,200 due to re-pricing risks of Fed rate hikes.”

On the other hand, the People’s Bank of China weakened the Yuan by the most in six weeks, as the move was considered another indication of slowing in the Chinese economy and increase to concerns over the world’s second biggest economy could reduce its imports. China is the world’s second biggest economy and one the biggest commodity importers.

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