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Gold Prices Steady Ahead Of Yellen Testimony on Hill

Gold prices remain steady, as the spot price for the metal stands at $1311.11 in the European session on Wednesday. On the release front, it’s another quiet day, with no major economic events out of the US. All eyes will be on Federal Reserve head Janet Yellen, who testifies before Congress on Wednesday and Thursday.

Gold prices tends to get a lift when there is geopolitical tension, as investors look for a safe-haven asset. This has been the case with the recent upsurge in violence in Ukraine. Clashes continue between Ukrainian government forces and pro-Russian militants, with casualties on both sides. The US has threatened Russia with further sanctions if Russia does not reign in the separatist forces which seek to undermine the Ukraine government. Meanwhile, Russia is maintaining a large military presence on its border with Ukraine, and the threat of a Russian invasion continues. Elections are scheduled in Ukraine in late May, but if the violence continues, the vote could be postponed, which could lead to a sharp reaction from the markets.

The Federal Reserve will be at center stage on Wednesday as Janet Yellen testifies before the Joint Economic Committee of Congress. Although recent employment data has been positive, Yellen has sounded cautious about the health of the economy, and if she reiterates these sentiments before Congress, we could see the dollar lose some ground. Meanwhile, the Federal Reserve trimmed its QE program by $10 billion last week. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends [1]. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.


XAU/USD for Wednesday, May 7, 2014

Forex Rate Graph 21/1/13

XAU/USD May 7 at 10:15 GMT

XAU/USD 1311.11 H: 1311.28 L: 1310.88


XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1273 1300 1315 1330 1350


Further levels in both directions:


OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged on Wednesday, continuing the trend seen a day earlier. This is consistent with the pair’s lack movement. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold moving upwards against the US dollar.

Gold is showing little activity on Wednesday. XAU/USD is flat in the European session.


XAU/USD Fundamentals

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [5]

Market Analyst at OANDA [6]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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