Gold hovered near the key level of $1 200 on Tuesday, extending losses into a third session, as investors awaited the testimony of Federal Reserve Chair Janet Yellen.
Comex gold for delivery in April lost 0.12% to $1 199.4 per troy ounce by 07:57 GMT, having shifted in a daily range of $1 204.4 and $1 197.9 an ounce. The precious metal slipped 0.34% during the previous session to settle at $1 200.8, having previously fallen to its lowest since January 5th at $1 190.6.
Ms. Yellen is set to testify before the Senate Banking Committee later today, expectedly providing clues on when the Fed will initiate its first rate hike since 2006.
The prospect of increasing borrowing costs has capped gold gains and pressured prices back to $1 200 from their highest this year at $1 308.8. Despite the improving US economy, minutes from Feds last meeting showed that policy makers are concerned about the impact of a possible rate increase, partly due to lower-than-targeted inflation.
Ms. Yellen is set to express her projection of the US economy and monetary policy and gold traders will be waiting to see if she will join other policy makers in their view of keeping interest rates low for longer.
Meanwhile, the National Association of Realtors announced on Monday that existing home sales dropped 4.9% to an yearly rate of 4.82 million units, down from expectations of 4.97 million houses re-sold annually. The association cited oversupply as the main source of the decline as it boosts prices, which in turn pushes some buyers out of the market.
The US dollar index for settlement in March was up 0.09% at 94.740 at 07:59 GMT, holding in a daily range of 94.770 and 94.615. The US currency gauge climbed 0.34% on Monday and closed at 94.657. A stronger greenback makes dollar-denominated commodities pricier for holders of foreign currencies and curbs their appeal as an alternative investment.
Europe agreed on Friday to extend Greece’s current bailout deal by four months, but the most indebted country in the region must craft and present a list of economic measures in order to get the approval of its creditors.
Led by Prime Minister Alexis Tsipras, the Greek government is expected to submit the requested plan on Tuesday, after missing the Monday deadline. The International Monetary Fund, the European Commission and the European Central Bank are expected to review the propositions and express their assessment by the end of April, before the deal extension can begin.
Germanys Finance Minister Wolfgang Schäuble once again restated the EU paymasters iron intolerance towards Mr. Tsiprass initial intentions to write down the majority of Greeces debt. Mr. Schäuble said that Athens will not be funded until the troikas approval, or in May at the earliest.
This leaves Greece with two tough months ahead as its current bailout deal is set to expire by the end of this month.
Meanwhile, the precious metal is also lacking the support of the world’s second-largest gold consumer. China’s markets closed on Wednesday as the country celebrates its one-week long Lunar New Year holiday.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remained unchanged on Monday at 771.25 tons.
Pivot Points
According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 200.6. If the contract breaks its first resistance level at $1 210.5, next barrier will be at $1 220.3. In case the second key resistance is broken, the precious metal may attempt to advance to $1 230.2.
If the contract manages to breach the S1 level at $1 190.8, it will next see support at $1 180.9. With this second key support broken, movement to the downside may extend to $1 171.1.
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