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James Hyerczyk
Comex Gold
Comex Gold

Gold futures are under pressure early Thursday, driven lower by a strengthening U.S. Dollar. The catalyst helping to weaken gold is the minutes from the January U.S. Federal Reserve meeting which showed policymakers are confident in the need to keep increasing interest rates throughout the year.

At 0830 GMT, April Comex Gold futures are trading $1324.30, down $7.90 or -0.59%.

Gold prices were hit hard on Wednesday, extending their losses from last week, helped by the Fed minutes and by higher short-term Treasury yields.

The minutes also showed that Fed policymakers had a more upbeat take on inflation. This should raise expectations that the central bank will likely raise interest rates in March. The price action in Fed Funds futures also indicated that three rate hikes are now almost fully priced in for this year, compared to two as recently as December.

Daily April Comex Gold


The direction of gold prices the rest of the day should be dictated by the movement in the U.S. Dollar.

The daily chart suggests that momentum is building to the downside with the February 8 bottom at $1309.00 a reasonable target. This is followed by a major 50% to 61.8% retracement zone at $1306.60 to $1291.50.

The market is also trading on the weak side of a short-term retracement zone at $1330.20 to $1336.70. Trading below this resistance area is also helping to give the market a downside bias.

On Thursday, traders will get the opportunity to react to Weekly Unemployment Claims. It is expected to come in at 230K, the same as the previous week.

The Conference Board’s Leading Index is expected to increase slightly by 0.7%.

Earlier today, FOMC Member Quarles gave a speech in Tokyo. His comments didn’t deviate from what the Fed has been saying, and came out in line with Wednesday’s minutes. In other words, investors should look for further gradual rate increases.

Later today, FOMC Members William Dudley and Raphael Bostic are scheduled to speak. Investors are hoping they shed some light on the frequency and number of rate hikes in 2018. In early January, Bostic said three rate hikes in 2018 may be too much. Gold prices could weaken further if Bostic changes his outlook to a little less dovish or a little more hawkish.

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