Gold On MCX Settled Flat At 27845

Gold on MCX settled flat at 27845 for a second session amid little response to ongoing testimony from Federal Reserve Chair Janet Yellen. There has been further mixed currency trading with only limited impact on gold, but a renewed increase in bond yields has put some downward pressure on prices. The dollar remained on the defensive against the yen during the US session on Wednesday, although there was choppy trading against the Euro with gold consolidating just above the $1,220 per ounce area.

During the European session there were source reports from the ECB that the central bank could plan to wind down the quantitative easing bond-buying programme at the September meeting. The Euro regained some support following the reports, although there was also a significant impact in reversing earlier declines in bond yields with a small net increase in European bond yields into the US open. Now investors now looked ahead to more comments from the Fed chair, will testify for a second day on the institution's monetary policy in front of the House Financial Services Committee.

The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but the subdued inflation outlook has since raised doubts over whether the U.S. central bank will be able to stick to its planned tightening path. Technically market is getting support at 27785 and below same could see a test of 27726 level, and resistance is now likely to be seen at 27930, a move above could see prices testing 28016.

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Suhani Verma

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