Wednesday, 29 March 2017

DAILY COMMODITY MARKET STRATEGY- 29 Mar 2017

Gold slips on technicals as dollar firms on U.S. rate hike cues

Gold fell on Wednesday in the face of technical resistance and positive economic data that boosted expectations for further U.S. interest rate hikes this year, supporting the dollar and equities markets.

"A resurgent U.S. dollar, along with higher U.S. yields and equities has taken the momentum out of the gold rally for now,"

The metal was also under pressure after failing to break through its 200-day moving average at $1,260, Halley said, posting its second consecutive down day in Asia.

Spot gold was down 0.3 percent at $1,248.32 per ounce at 0325 GMT. U.S. gold futures slipped 0.6 percent to $1,247.9.

The dollar pulled away from 4-1/2-month lows against a currency basket on Wednesday as solid data backed expectations for more U.S. interest rate hikes this year.

U.S. Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to U.S. overnight interest rates this year seemed "about right."

The yellow metal was likely to continue the downward momentum through Wednesday to around the $1,235 an ounce level, he added.

A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.

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