Gold Falls In Anticipation of Fed Chair Yellen's Remarks to US Congress
New York (May 7) Gold prices are lower in early trading Wednesday. Some technical selling is featured, along with some more chart consolidation after recent price gains. The market place is mostly subdued ahead of testimony to the U.S. Congress from Federal Reserve Chair Janet Yellen. Spot gold was last down $7.00 to $1,304, spot silver last traded down $0.16 at $19.51.
The highlight in the market place Wednesday will be Yellen’s testimony on the U.S. economy and monetary policy to the U.S. Congress. The market place will closely scrutinize Yellen’s remarks, to see if she says anything that would be construed as being too dovish or too hawkish on U.S. monetary policy.
In overnight news, the HSBC purchasing managers’ index (PMI) report for China’s services sector came in at 51.4 in April from 51.9 in March. This data did not have much of an impact on markets as it was in line with forecasts.
After Yellen’s testimony Wednesday, the next big economic event for the world market places comes with the European Central Bank monthly monetary policy meeting on Thursday. There is growing pressure on the ECB to implement further monetary policy stimulus measures, amid worries about price deflation in the European Union. The Euro currency is at a multi-week high against the U.S. dollar, and the strength of the common currency is also a concern to many European officials and another reason to EU interest rates.
The Russia-Ukraine tensions are still high, although there have been no major developments at mid-week. Gold and U.S. Treasuries have seen safe-haven buying amid the heightened Russia-Ukraine conflict. This matter is not going away soon and will likely see an escalation in tensions. This is a bullish underlying factor for the gold market.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, preliminary productivity and costs, the global services PMI, the weekly DOE liquid energy stock report, and consumer installment credit.
