Sasha Singh
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Gold Trimming Gains From Its Previous Rally

©Merk Investments,LLC

Yellen today in testimony to Senate banking Committee surprised investors with some hawkish comments. Fed chairwoman Janet Yellen stressed that the decisions about interest rates will depend on the data. If the labor market continues to grow faster than anticipated than Fed might increase interest rates sooner than currently projected. Labor market has shown some strong growth in recent months. Unemployment was 6.7% in February which then declined to 6.1%. 200000 jobs a month were created in the economy over the past 5 months, which is the strongest stretch since late 1990s. In her statement she reiterated that although the economy continues to improve but the recovery is not yet complete and thus Fed will continue to provide support to recover economy and labor market conditions.

(XAUUSD : 4 Hour Chart)

US dollar posted gains after the Fed Chairwoman comments. Gold declined trimming all its gains from its recent rally. On the 4 hour chart, Gold was facing support at 1305.66 but today declined below it. Currently it is testing support from 200 day SMA or from 1291.86 which earlier also acted as support for the pair. We might see some more losses in gold as 50 day SMA is contracting towards the 100 day SMA signaling that the commodity will continue to decline or follow the downtrend. The next support it will find at 1282.84 if it continues to decline.