Gold pushes higher ahead of Yellen testimony

Tuesday, February 11, 2014

US markets closed marginally higher on Monday as both the S&P 500 and DJIA extended gains for the third consecutive session. Investors have been kept busy with corporate earnings over the past few weeks but with earnings season coming to a close the focus will switch to macro events, with particular attention on Janet Yellen’s first monetary policy report to the House. The majority of market participants expect a continuation of the current tapering policies with interest rates remaining low for the foreseeable future; however, emerging market contagion fears which prompted the recent stock market sell-off could cap any significant gains.

Spot gold prices rallied to a year-to-date high as Chinese buyers returned to the market and investors concerned with the Fed’s outlook on tapering piled into the yellow metal. Prices have rallied higher in each of the last five sessions; pushing above $1,285 in early morning trade despite the recent bullishness in risk assets which saw US equity markets record their largest weekly gains this year. With the recent weakness in US employment data fuelling concerns that the US recovery could derail if the Fed cuts QE too quickly, gold prices may gain further upside potential as they look to target $1,300, a level last reached in early November.

Chinese stocks rallied higher during overnight trading with financial stocks leading the way higher ahead of Yellen’s testimony before the House Financial Services Committee. Both the CSI 300 and Shanghai Composite added 0.8% as JPMorgan upgraded its outlook on the Chinese banking sector. The financials subsector in the CSI 300 traded 1.5% higher as the recent rout in emerging markets offered investors returning from the week long New Year holidays attractive buying opportunities.

 Spot gold prices rally for the fifth consecutive session, targeting $1,300

XAU Curncy Gold Spot Oz 2014 02 11 07 47 45 

 

Events for today: Tuesday, 11 February 2014

JP Market Holiday

0001

UK

Jan

BRC Retail Sales

1500

US

Dec

Wholesale Inventories

 

Topics: Equities, Gold
More from: Kash Kamal