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Gold falls as the dollar pares losses ahead of Yellen's testimony
July 14, 2015 / 3:00 AM / 2 years ago

Gold falls as the dollar pares losses ahead of Yellen's testimony

NEW YORK/LONDON (Reuters) - Gold eased on Tuesday as the U.S. dollar came off its lows and the market awaited Federal Reserve Chair Janet Yellen’s semi-annual testimony to Congress on Wednesday and Thursday, which may provide more signals about a looming rate rise.

Gold bars are stacked at a safe deposit room of the ProAurum gold house in Munich March 6 2014. REUTERS/Michael Dalder/Files

Prices briefly steadied after U.S. retail sales unexpectedly fell in June as households cut back on purchases of automobiles and other goods, raising concerns the economy was slowing again. This stoked concern over the outlook for the U.S. economy, knocking the dollar and fuelling uncertainty over the timing of a Federal Reserve rate increase.

Spot gold XAU= was down 0.3 percent at $1,154.60 an ounce at 2:35 p.m. EDT (1835 GMT), while U.S. gold futures GCv1 for August delivery settled down 0.2 percent at $1,153.50.

“The retail sales were dovish today so it’s a wait-and-see (for) what the Fed says later in the week,” said Michael Loewen, commodities strategist for TD Securities in Toronto.

“Does the Fed stick to its script that it’s been saying for a very long time now or do they look to the more recent data?”

Expectations for a rate hike have pushed gold down 2.5 percent this year. Gold tends to come under pressure as interest rates rise, as these boost the opportunity cost of holding the metal, while lifting the dollar, in which it is priced.

“Considering we have Janet Yellen speaking tomorrow, any weakness in economic data ahead of that may help soothe a few nerves,” Saxo Bank’s head of commodity research Ole Hansen said.

Stock markets worldwide rose modestly after a landmark nuclear deal between Tehran and six global powers left sanctions on Iran in place for now. [MKTS/GLOB]

Oil prices rose about 1 percent, reversing early losses after it became apparent that the deal will not immediately remove sanctions placed on Iranian crude export. [O/R]

Technically, analysts said gold looks vulnerable to further losses.

“The metal is trading in a short-term bearish trend channel off the May 18 high of $1,232, marked by lower highs and lower lows,” ScotiaMocatta’s technical team said in a note.

In a note, Capital Economics said: “With the exception of gold, precious metal prices have recovered a little from last week’s lows, supporting our view that the worst is over.”

Silver XAG= was down 1.1 percent at $15.33 an ounce, platinum XPT= was 1 percent lower at $1,021.25 an ounce and palladium XPD= was down 0.6 percent at $653.

Additional reporting by Manolo Serapio Jr in Manila; Editing by David Evans and Tom Brown

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