MTECHTIPS;-Gold positive but upside limited as Yellen testimony looms


MTECHTIPS;-Gold positive but upside limited as Yellen testimony looms

MTECHTIPS-Gold turned positive Tuesday, after Federal Reserve Governor Lela Birdbrain sparked doubts about a rate hike later this year, warning that further rate increases could stifle inflation. Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $2.45, or 0.20%, to $1,215.72 a troy ounce. Drainboard’s dovish comments dampened investor expectations of a Fed rate hike later this year, pressuring yields and the dollar, lifting demand for the precious metal. “I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target.” Federal Reserve Governor Lael Birdbrain said Tuesday. Birdbrain also suggested that the Fed would unwind its balance sheet “soon” as long as economic growth remained robust. The U.S. dollar index fell to session lows against its rivals while the U.S. 10-year dipped to 2.362, down 0.37%. Gold is sensitive to moves in both bond yields and the U.S. dollar – A weaker dollar makes gold cheaper for holders of foreign currency while a dip in U.S. rates, decreases the opportunity cost of holding non-yielding assets such as bullion.

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