Gold slips to fresh 2-week lows after Yellen boosts dollar
After rising to a five-day high on disappointing inflation figures from the U.S. near $1280 in the early NA session, the XAU/USD pair came under a renewed pressure as the greenback gathered strength, pushing the US Dollar Index above the 97 handle. As of writing, the XAU/USD is trading at $1258, losing 0.65%, or $8, on the day.
After the FOMC had decided to raise the benchmark rate by 25 basis points in line with the market expectation, Chairwoman Yellen gave her statement, in which she sounded fairly hawkish by explaining that one-off items largely drove the inflation and the employment was near maximum sustainable level. Yellen further added that additional gradual rate hikes appropriate over the next few years.
Following her statement, while answering a question from the press, Yellen said that the conditions were in place for the inflation to continue to rise and added that the Committee's expectations and forecasts are essentially unchanged since March.
For the next couple of days, the US Dollar Index should stay as the main driver of the pair's price action as the economic calendar won't be offering any top tier data that could impact the pair directly.
Technical outlook
The pair could face the first technical support at $1253 (May 25 low) ahead of $1246 (May 18 low) and $1240 (May 17 low). On the upside, resistances align at $1269 (20-DMA), $1280 (daily high) and $1288 (Jun. 8 high).
FOMC & Yellen headlines:
- Fed's Yellen: We could start trimming balance sheet relatively soon
- Fed's Yellen: I don't think regulations have played a big role in impeding the economy
- Fed's Yellen: We could revisit in the future the right level of its inflation target
- Fed's Yellen: Growth has picked up somewhat, but remains low
- Fed's Yellen: Important not to overreact to a few inflation readings; data can be noisy
- Fed's Yellen: Fully intends to serve out term as Chair
- Fed's Yellen: Employment is near maximum sustainable level
- Fed's Yellen: Steady labor participation is positive
- FOMC's decisions regarding monetary policy implementation - Jun 14, 2017
- Fed raises rates by 25 bps; second hike of 2017