Higher Yields Continue To Dampen Enthusiasm For Gold
(Kitco News) - Gold remains under pressure as higher bond yields have attractedflows into the U.S. dollar. The U.S. government is auctioning off a massiveamount of U.S. debt and tepid demand may push yields higher and continue tomaintain flows into the dollar. We remain neutral on the short-term optics for gold, after suggestingliquidation of long positions at the $1,358 level late last week. We look at the $1,335 area for initial support, witha close below this level suggesting a test of the $1,322 area. First resistancelies at $1,347. Expect volatility during theauction process and into tomorrow where the release of the FOMC meeting minutesfor January will have traders looking for clarity on how aggressively the Fed will be in the 2018 tightening cycle.With the volatility in the equity space, the Fed may be less inclined toproffer an aggressive policy and may fall back to the jargon that policy willbe determined by economic data. The language on the Fed's concern over recentincreases in the inflation gauges will be the key pivot for traders. If the Fedremains behind the curve, gold should see renewed buying interest.
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