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Gold is trading at $1319, down $2 as traders await minutes from the Federal Reserve’s January meeting, in which the US central bank trimmed the bond-buying scheme by $10 billion.
When the Fed announced the tapering in early January, gold was pushed below the $1220 mark. The metal has moved nearly $100 higher since then, largely due to the fear surrounding emerging markets. Yesterday gold hit a three-and-a-half month high, so it is not surprising we have seen some profit-taking today.
Janet Yellen, who has taken over as chair of the Federal Reserve this month, is known for her dovish views and is in favour of a stimulus package; however, she has talked about taking ‘measured steps’ to reduce the bond-buying scheme.
If the minutes suggest the US recovery still has some way to go, we could see gold trade higher as it would suggest there will be no tapering in the near future.
Gold is finding support at the 200-day moving average of $1300; if we take out the recent high of $1332, it could put it on track to reach $1350.