Published: Wed, March 22, 2017
Finance | By Laverne Griffith

Global gold prices slip on technical selling, Fed stance lends support

Global gold prices slip on technical selling, Fed stance lends support

Asian shares hit 21-month highs on Tuesday while the dollar and USA bond yields were on the backfoot on the prospect of a less hawkish than previously expected Federal Reserve policy trajectory.

Public comments from Chicago Fed President Charles Evans who said Federal Reserve was on track to raising interest rates twice more this year, likely helped the greenback rebound, analysts said.

Wall Street shares drifted lower on Monday as investors anxious that President Donald Trump's plan to cut taxes and boost the economy could take longer than earlier expected.

Japan's Nikkei dropped 0.3 percent, weighed by financial stocks, which were hurt by lower USA yields and exporter stocks, which fell on the yen's gains against the dollar. Meanwhile, Trump has yet to release details about his plans for the fiscal overhaul, saying that his administration must first tackle health-care reform.

"U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now".

Gold prices edged higher in U.S. trading on Friday with the dollar decline following a dip in the University of MI consumer confidence inflation expectations index the main catalyst for USA losses.

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In his comments yesterday, he continued to talk-up the prospect of two additional interest rate hikes this year. "The market is again betting on an increase in the number of interest rate rises this year". It last stood at 2.479 percent.

The dollar index is expected to trade in the range of 99-103 in the months ahead, while the greenback may pair some gains against the EM Asian currencies unless the Federal Reserve delivers a hawkish tone at its June monetary policy meeting.

"I'm still quite confident that United States protectionist policies will do more harm than good".

The dollar index of its value against a basket of six currencies hit a six-week low of 100.02 on Monday before recovering most of its losses.

The Australian dollar is well supported today with the Aussie trading to the highest level against the US dollar since early November.

The market's focus on Monday was primarily on weakness in the US dollar near the beginning of the trading session, but as of 1700 GMT, the USA dollar had regained its position and was positive, at which point the focus became potential geopolitical instability triggered by Brexit. "But the currency has strengthened since the Fed tightened policy and is edging further away from where we think the RBA views the sweet spot" in the low 70s.

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